Car insurance is so expensive in Michigan because the state has the highest minimum coverage requirements in the country. Michigan is also a no-fault state, meaning that drivers are required to purchase personal injury protection (PIP) to pay for injuries after a crash, regardless of who was responsible. While this is not unusual in a no-fault state, Michigan’s PIP requirements are particularly high. Most policyholders will need at least $250,000 in PIP, and drivers even have the option to purchase unlimited PIP.
Michigan car insurance also is expensive because drivers with high PIP limits need to pay a fee to the Michigan Catastrophic Claim Association (MCCA), which covers the cost of PIP claims beyond a certain threshold. Since Michigan’s 2020 auto insurance reforms, however, only drivers who choose unlimited PIP need to pay an MCCA fee.
Finally, the high cost of insurance in Michigan has made coverage unaffordable for many drivers. Roughly 1 in 5 drivers in the state is uninsured, according to the Insurance Information Institute. Fewer insured drivers to pay premiums drives up rates for those who are paying. Similarly, a high rate of insurance fraud, fueled by Michigan’s generous benefits, has pushed premiums higher still. Studies show that 8%-10% of all claims in Michigan are fraudulent.
To summarize, high required coverage limits, fraud, and a large proportion of uninsured motorists have made Michigan one of the most expensive states for car insurance.
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