Michigan Governor Signs Doubling of Mini-Tort Limit into Law

Gov. Rick Snyder signed a bill into law Thursday that doubles the limit up to which a driver can sue for collision-related damages not covered by their own policy.

HB 5362, now called Public Act 158 of 2012, raises the so-called “mini-tort” limit from $500 to $1,000.

“It is important we update state policies to reflect changes across our state,” Snyder said in a statement. “The $1,000 recovery limit will help better cover repair damages.”

Michigan is one of 12 states in the U.S. that have a no-fault coverage law reimbursing policyholders for collision-related damages and mostly bars litigation between parties, regardless of who was at fault for the crash. Mini-tort is an exception to the no-fault law that allows motorists to sue each other in small claims court to reclaim their insurance deductibles in the event of a crash.

Michigan is the only state in the nation where a driver involved in a crash would be in a position to sue the at-fault party for a collision deductible. That’s because every state except Michigan requires drivers to carry property damage liability insurance, which pays for other people’s repair costs that the policyholder is responsible for. So in the majority of states, most or all of the crash damages would be paid for by the insurance of the person who caused the crash.

Vehicle damages in Michigan, on the other hand, are only covered by the car owner’s policy, under collision coverage.

Michigan residents can buy coverage against mini-tort claims that may be filed against them, called “limited property damage liability.” Shoppers who want to buy an insurance policy online with mini-tort coverage should first check out Michigan’s consumer guide on the topic. Mini-tort is an optional form of insurance coverage exclusive to the state.

The legislation behind the act saw a smooth course through the state Legislature behind unanimous votes in the state House on April 19 and state Senate on May 22.

The mini-tort limit saw its last increase, from $400 to $500, in 1995, according to a legislative analysis.

“Despite rising costs, the amount residents can collect for damages under the mini-tort provision hasn’t been increased in decades,” the bill’s sponsor, Cindy Denby (R-Handy Township), said in a statement. “This common-sense reform will be helpful to Michigan drivers.”

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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