NMAC WITHIN CLASS E AIRSPACE.

Narrative

WE WERE CRUISING AT 2500 FT MSL WHICH PLACED US ABOUT 600-700 FT BELOW A BROKEN LAYER OF BUILDUPS. WE KNEW THE BASE OF THE LAYER TO BE ABOUT 3200 FT MSL BECAUSE WE HAD AN EARLIER DSCNT THROUGH A HOLE TO REMAIN VFR. BOTH OF US WERE LOOKING STRAIGHT AHEAD AND DISCUSSING THE FLT AT THE TIME OF OUR NEAR MISS. WE BOTH CAUGHT SIGHT OF A SINGLE ENG CESSNA AT OUR 10 O'CLOCK POS ALMOST DIRECTLY ABOVE US. BY THE TIME WE SAW THE OTHER ACFT; IT HAD ALREADY DSNDED THROUGH OUR ALT AND NOW AT OUR 4 O'CLOCK POS. I ASKED SAGINAW APCH IF THEY WERE AWARE OF ANOTHER ACFT IN OUR AREA. I WAS INFORMED THAT WE WERE THE ONLY TARGET IN OUR AREA. I ADVISED THEM OF THE OTHER AIRPLANE AND WE WERE TOLD TO SQUAWK 1200 BECAUSE WE WERE LEAVING HIS AIRSPACE. WE WERE ALSO ADVISED THAT THEY HAVE POOR RADAR COVERAGE IN THIS AREA. ALTHOUGH I DON'T FEEL WE HAD A FALSE SENSE OF SECURITY BECAUSE WE WERE GETTING RADAR ADVISORIES; IT ALWAYS REMAINS A POSSIBILITY. THE FACT THAT THERE WAS POOR RADAR COVERAGE IN THIS AREA AND A FALSE SENSE OF SECURITY MAY BE CONSIDERED CONTRIBUTING FACTORS.