Michigan’s Auto Insurance Law Has Changed
The information contained in the following publication pertains to auto
insurance policies issued on or before July 1, 2020. Publications about auto
insurance policies issued on or after July 2, 2020 are available at
michigan.gov/autoinsurance.
For more information about the new auto insurance law and how it will affect
you, please visit: www.michigan.gov/AutoInsurance.
Consumer Counselor
Insurance Information for Michigan Consumers
[FIS-PUB 0225] Michigan Department of Insurance and Financial Services | 877-999-6442 | www.Michigan.gov/DIFS [11/19]
Auto Repair Rights Under a Michigan Automobile Policy
Public Act 190 of 2004 was enacted to clarify a
consumer’s auto repair rights under a Michigan
automobile policy. These rights are granted
only to those policyholders who choose to
purchase optional physical damage coverage
(comprehensive and collision) on their
Michigan automobile policy.
In order to reduce the cost of auto repairs, auto
insurers often survey repair costs at various
repair facilities, and may refer policyholders
with auto damage claims to the facilities that
meet the insurance company’s criteria for cost
and quality. These programs are commonly
referred to as “direct repair programs” and are
designed to reduce the costs of claims, which
ultimately help contain insurance rates for
collision and comprehensive coverage. The
direct repair programs work like preferred
provider arrangements, under which an
insurance company guarantees repairs will be
done at no additional cost or that the repairs
will be completed to the policyholder’s
satisfaction if the policyholder uses one of the
repair facilities participating in the insurance
company’s program.
Although insurance companies select the
repair facilities that will participate in the
insurer’s direct repair program, these programs
should not restrict the policyholder’s choice of
repair facilities. While some policyholders may
prefer assistance in locating a repair facility,
the insurance company should not restrict a
policyholder from choosing a repair facility of
their choice. In fact, the insurance company
should advise the policyholder at the time a
physical damage claim is filed if the company
has an agreement with a particular repair
facility and should also advise the policyholder
that they are under no obligation to use that
particular repair facility.
However, the insurance company should make
the policyholder aware that the insurance
company may use a different claim settlement
process if the auto repair work is to be
completed at a repair facility of the
policyholder’s choice. For example, if the
insurance company can have the vehicle
repaired at one of its direct repair facilities for
$2,000 and an independent repair facility
charges $4,000 for the same repair, insurance
company approval may need to be obtained for
the additional amount since the insurance
company is not required to pay more than a
reasonable amount for repairs and parts based
on the insurance policy terms. The insurance
company may work with the independent shop
to resolve the difference in repair cost based
on how much a similar repair would cost at
other repair facilities in the area. In these
situations, if the difference in cost cannot be
resolved, the policyholder will be informed and
may be required to pay some or all of the
difference in repair cost if they want the repair
to be completed at the repair facility of their
choice.
Michigan consumers should contact the Office
of Consumer Services in the Department of
Insurance and Financial Services (DIFS) toll
free at 1-877-999-6442 if they are denied
coverage or benefits based on their choice of
auto repair facilities or if they are unable to
resolve a dispute with their insurance
company. Assistance is also available from
the DIFS web site at: www.michigan.gov/difs
.
[FIS-PUB 0225] Michigan Department of Insurance and Financial Services | 877-999-6442 | www.Michigan.gov/DIFS [11/19]
About DIFS
The mission of the Michigan Department of
Insurance and Financial Services is to ensure
access to safe and secure insurance and
financial services fundamental for the
opportunity, security and success of Michigan
residents, while fostering economic growth and
sustainability in both industries. In addition, the
Department provides consumer protection,
outreach, and financial literacy and education
services to Michigan citizens. For more
information please contact DIFS at 877-999-6442
or visit www.michigan.gov/DIFS
