Why Car Insurance Is So Expensive in Michigan

For the fifth year in a row, Michigan has ranked as the most expensive state for Car Insurance. This comes as no surprise. For the past 10 years, Michigan has never fallen out of the top 3 spot for most expensive state for car insurance. In 2018, The average car insurance premium for Michigan residents is 64% higher than the national average premium.

For 2019, our own research has shown that currently Michigan drivers are paying on average $1,300 for a one full coverage vehicle. This is $346 higher than the national average. The national average currently stands at $954 per year.

So why is that?

The main reason is the state’s “unique” no-fault car insurance system. However, there are a few other factors that you may have not known about that contribute to the state’s high insurance premium.

The Top 3 Reasons why Car Insurance is so expensive in Michigan:

No Fault Car Insurance

Michigan’s no-fault car insurance policy allows drivers to recover financial losses from their own insurance company regardless of who is at fault. This means your insurance company will have to pay for your medical expenses even when you’re not at-fault for the collision.Interesting fact: No-Fault car insurance was actually introduced to lower insurance costs and reduce fraud. However, it ended up doing the opposite. All states that have a mandatory no-fault car insurance policy have seen a rise in both insurance prices and fraud.

 


 

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Unique PIP (Personal Injury Protection) Required

Michigan drivers are required to have a Personal Injury Protection (PIP) policy. Car owners are required to purchase PIP insurance that covers the medical expenses of the policyholders and household residents if they are injured in a car accident. The PIP coverage also extends to passengers who don’t have their own PIP Insurance. Because Michigan is a no-fault state, drivers are required to cover their own medical bills regardless of fault, and that requires drivers to have PIP.

Another interesting part to Michigan’s Personal Injury Protection requirement is the uniqueness of it. Other states that have PIP requirements place limits on the coverage. Michigan’s PIP policy does not have a limit. In Michigan, Personal Injury Protection policies guarantee unlimited lifetime medical benefits to those injured in an auto accident. Your car insurance company is required to pay up to $555,000 to cover lifetime medical expenses. Any medical expenses that exceed this amount are covered by the non-profit Michigan Catastrophic Claim Association (MCCA) . Michigan drivers contribute to the MCCA each year through the annual assessment fee.

High Rates of Insurance Fraud

Michigan has a relatively high rate of insurance fraud. Studies show that approximately 8 – 10% of all no-fault claims in Michigan are fraudulent. Insurance Fraud does not help anyone. Fraudulent claims raise costs for insurance companies, which they pass onto drivers.


So What Can You Do To Get The Lowest Rates?

There are quite a few things that you can do to ensure you are getting the best possible car insurance rate in Michigan. Our article  “How To Get The Best Auto Insurance Rates In Michigan” covers all of the important ones.

If you would like to have someone review your insurance to ensure that you really are getting the best rates – you can always contact us directly.

To learn more about car insurance, head to our dedicated car insurance section.

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