First off, Michigan does not have statewide leash laws, but there may be a local rule that makes the dog ostensibly negligent per se for being off leash. Assuming the dog or owner was not violating any specific laws, you are probably in a better position to judge whether or not you were volating any laws at the time of the collision - speed limit, unsafe lane change, other - for them to bolster their case.

In “animal injury as property damage cases” I reviewed, damages can be: Fair Market Value (was it a special breed or dog, otherwise a used dog does not cost so much); Consequential Damages (medical bills, however, if the dog had a market value of $1000, it does not make sense to spend $6000 in medical bills); Intrinsic Value (a pet may have value beyond resale, especially to the owner, see e.g. Corso v. Crawford Dog and Cat Hospital, Inc., 415 N.Y.S.2d 182 (N.Y.City Civ.Ct., 1979)); Punitive Damages (if the act was done with malice, there may even be criminal possibilities); Mental Anguish or Suffering of the Owner (If the owner saw the accident, this claim would be bolstered; similarly, because the dog survived damages of this nature are less likely. I did not find any Michigan cases directly on point); and Loss of Companionship (very few courts entertain these claims).