Auto Insurance in Michigan: What is the need for liability covereage?

The document you linked says:

You may be sued because of an accident, as was discussed in the section on residual liability insurance. If this happens, your no-fault policy will pay up to the amounts shown in the residual liability section.

However, courts sometimes award more than these amounts. If this happens, you would be responsible for paying the amount not covered by your insurance policy. To protect themselves, many people buy higher limits of liability insurance.

That's the reason people opt for coverage in excess of the liability minimums. For example the minimum requirement covers:

• Up to $40,000 for each accident if several people are hurt or killed.

If you did something horrific, say you drunkenly ran into a full bus killing all passengers, you'd almost certainly be sued and ordered to pay significantly more than $40k.

It's worthwhile looking into an umbrella policy too, in my opinion.

Since we are in a "no-fault" state, is there any reason to increase this amount?

Answer, No.

The "no-fault aspect" does not in any way reduce your liability when driving.

You would easily be sued for $1m or more due to your actions when driving.

In Germany, the worst cost of a traffic accident caused by a car was equivalent to about $70,000,000. In Spain, a lorry driver killed about 340 people by accident (fuel truck drove into a full camping ground). What do you think is the cost if you hit an 18 year old who will spend the rest of his life in a wheelchair? To anyone outside the USA a $100,000 limit seem quite pathetic.

“No fault” insurance doesn’t mean you don’t have to pay. It means my insurance has to hand over money to me. My insurance will then ask you and your insurance to pay the money back. If the cost is above the limit you are in trouble. You may lose your million dollar home and be bankrupt for life. It’s just a way to keep me safe from uninsured or lowly insured drivers.

However, a much higher limit doesn’t cost much more. Because most accidents are below the limit. European countries usually have at least a million in third party liability.