Yes, Michigan is a no-fault state for car insurance. In the event of an auto accident, a Michigan driver’s no-fault personal injury protection (PIP) insurance pays for his or her own medical expenses, lost wages and at-home services like cleaning or laundry. It does not matter who caused the accident, unlike in fault states, where the at-fault driver must pay for the other party’s expenses.
Minimum Limits Required By Michigan Insurance Laws
Bodily injury liability: $50,000 per person / $100,000 per accident
Michigan No-Fault Restrictions on Car Accident Lawsuits
Each no-fault state has its own rules for when you can sue an at-fault driver after an accident. Currently, Michigan is one of the strictest no-fault states in the country, only allowing you to sue the at-fault driver under very limited circumstances.
When You Can Sue According to Michigan No-Fault Laws
If the accident is in Michigan and causes death, serious injury, or permanent disfigurement
If a Michigan driver is involved in an accident in another state
If a Michigan driver is in an accident within the state involving a non-resident driving a car not registered in Michigan
If the at-fault driver is sued, their liability policy will pay up to its limits. If the court awards more than their limits, they will be personally responsible for paying the amount not covered.
Michigan’s auto insurance reform law allows drivers to opt out of buying unlimited personal injury protection (PIP), but they need higher liability limits. Michigan’s auto insurance reform law changed the state’s car insurance requirements for policies issued or renewed after July 2020. Michigan’s insurance reform also decreased the Michigan Catastrophic Claims Association (MCCA) fee, which drivers must pay if they purchase unlimited PIP insurance.… read full answer
Michigan Auto Insurance Reforms After July 2020
Drivers need $250,000 in personal injury protection per person, with lower limits or exclusions allowed for drivers with Medicare, Medicaid, or qualified health care.
Insurers must offer an optional supplement to PIP insurance that covers attendant care, such as home nursing.
Insurers must offer $3,000 in limited property damage liability insurance, which applies if you are 50% or more at fault in an accident and the other driver sues you for vehicle damage.
Michigan has some of the most expensive car insurance premiums in the country, as well as high fraud rates. To combat this, Michigan’s auto insurance reform law implemented several new consumer protections.
Consumer Protections Created by Michigan’s Auto Insurance Reform Law
Insurance companies can no longer consider gender, home ownership, marital status, credit score, educational level, occupation, and ZIP code when determining rates.
Drivers cannot be penalized for a lapse in auto insurance coverage as long as they apply for insurance by January 1, 2022.
Michigan insurers must reduce PIP premiums, and all premiums need to be approved by the Department of Insurance and Financial Services.
A new fraud investigation unit was formed.
Fees and penalties for insurance companies who violate laws increased.
Car insurance in Michigan is expensive because it's a no fault state with high insurance coverage requirements. But the biggest reason Michigan drivers pay more for car insurance than anyone else in the country is that it is the only state with unlimited. In Michigan, you can expect to pay approximately $3,833 per year for full coverage car insurance or $1,908 per year for minimum coverage. Car insurance in Michigan is more expensive than the national average, which is around $2,000 annually for … read full answerfull coverage and about $700 per year for minimum coverage.
The cost of car insurance is steadily increasing, too, both in Michigan and nationwide. As the cost of providing insurance goes up, the premiums insurers charge also rise. All insured drivers share the increasing cost of insurance. That is why your rates tend to go up every time your policy is renewed, regardless of whether any individual factors—like your driving record or location—have changed.
There are several unique reasons why car insurance goes up every year in Michigan, too, even if your details remain the same.
Top Reasons Car Insurance Is Expensive in Michigan
People in Michigan are driving more. As a result, the number of accidents, claims, and payouts is rising, too. For example, there were approximately 902 fatal crashes in 2019 in Michigan, versus 896 fatal crashes in 2015.
Auto repairs are getting more expensive. Vehicles today cost more to repair due to the added technology and features. For example, a National Association of Insurance Commissioners study found that the average cost of vehicle repairs was around 8% higher in 2018 than it was in 2014.
People in Michigan drive uninsured. As the cost of car insurance continues to rise, more drivers take the risk of driving without car insurance. In 2019, 26% of drivers lacked even minimum liability insurance in Michigan. The cost of uninsured drivers is passed on to consumers through higher premiums.
Healthcare in Michigan is getting more expensive. Car insurance companies are hit hardest when paying out claims involving medical bills, and it’s not getting any cheaper. Healthcare spending increases by an average of 2% every year in Michigan.
Michigan is experiencing more severe weather. In Michigan, weather events like severe storms, serious winter weather, and droughts are becoming increasingly common. These weather events cause insurers to pay out a higher number of claims, which tend to be more expensive and less predictable. As a result, they have to raise rates to keep pace.
However, there could be other issues elevating your rates.
If your driving record is clean and your rates are still high, your car insurance might be expensive because of your:
Age. Drivers under 25 and older than 65 pay more for auto coverage because they are statistically more likely to be involved in serious and fatal accidents. In Michigan, 16-year-old drivers pay an average of $6,508, 25-year-old drivers pay an average of $2,058, and people over 65 pay an average of $1,922.
Location and driving patterns. Population-dense cities have higher premiums than rural areas because city living usually means more accidents, more property crime, and more frequent claims. In Michigan, the most expensive locations for insurance are Detroit, Dearborn, and Warren. You can also expect rates to change based on your driving patterns—long commutes or regular driving in high-risk areas can cost you.
Financial responsibility. You can demonstrate financial responsibility by maintaining minimum car insurance with no gaps in coverage. Letting your coverage lapse could result in a higher rate when you get your next policy.
Claims history. Numerous recent claims can drive up your premiums. That's one reason why it sometimes makes sense to pay out of pocket rather than file a claim, especially if a claim won’t get you much more than your deductible.
How to Get Cheaper Car Insurance in Michigan
Multiple factors affect the cost of car insurance. Some things you can’t control, but you do have a say in most of the contributing factors. Driving safely, obeying traffic laws, and keeping a clean driving record are the best ways to keep your insurance costs down.
Other than that, the best way to lower your car insurance costs is to compare rates from at least three insurance companies. Ideally, you should check your rates every 6-12 months, when you renew your policy. But at a minimum, be sure to check your record and shop for rates every three to five years, since you may be able to get a lower rate if a traffic violation falls off your record.
In Michigan, the most expensive policies cost roughly $7,950, and the least expensive coverage costs around $266, when all driver profile information is the same. That means you could save as much as $7,685 simply by shopping around. Be sure to confirm you’re getting all the discounts you’re eligible for, too.
No-fault insurance is bad because car insurance premiums are higher in no-fault states, and it is difficult for drivers to sue for damages related to pain and suffering. No-fault insurance also does not penalize negligent drivers as much as so-called tort states.
Why No-Fault Insurance Is Bad:
Insurance rates are higher in no-fault states than tort states, on average, because more coverage is required.… read full answer
Your ability to sue an at-fault driver is limited.
Negligent drivers face less of an insurance penalty when they injure someone in a wreck.
No-fault states have higher traffic fatality rates than tort states.
It’s easier to commit insurance fraud in no-fault states.
On the other hand, there are also benefits to no-fault insurance. For example, no-fault insurance pays for medical expenses after all accidents, so it helps drivers immediately get their bills covered without having to wait for fault to be determined.
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