Michigan car insurance is typically expensive due to its no-fault insurance requirements, inflation, and high rates of uninsured drivers, fraud, and personal injury lawsuits.

Written by Jaya Anandjit

Edited by Jessica Barrett

Updated on Jan 31, 2024

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5 reasons why Michigan car insurance is expensive
Michigan car insurance costs
FAQs

Like most no-fault states,

Michigan

car insurance can be expensive due to higher mandated

auto insurance

limits—including personal injury protection and property protection—plus inflation, and high rates of uninsured drivers, insurance fraud, and personal injury lawsuits.

5 reasons why Michigan car insurance is expensive

According to a 2020 report from the

Insurance Information Institute

(III), Michigan is the third most expensive state for car insurance on average. With that said, there are a few factors that contribute to Michigan’s high auto insurance rates:

Michigan’s no-fault car insurance requirements

High rates of uninsured drivers on Michigan roads

Michigan’s insurance fraud problem

High rates of personal injury lawsuits in Michigan

Inflation and expenses in the auto insurance industry

Let’s go over each factor to unpack why your Michigan car insurance rates may fall on the higher side.

Coverage requirements: Michigan is a no-fault state

Michigan is among other

no-fault states

on the III’s list of the most expensive states for auto insurance. No-fault state drivers typically face higher insurance rates due to increased mandated coverage types and higher liability coverage limits.

For example: Idaho—an at-fault or tort state—is one of the cheapest states for car insurance, with 25/50/15 liability limits mandated by state law. On the other hand, Michigan’s no-fault insurance system requires 50/100/10 liability insurance, PIP coverage, PPI coverage, and 50/100 residual liability insurance.

Michigan car insurance requirements1

$50,000 of

bodily injury liability (BIL)

per person

$100,000 of bodily injury liability (BIL) per accident

$10,000 of

property damage liability (PDL)

per accident

$250,000 of

personal injury protection (PIP)

$1,000,000 of property

property protection insurance (PPI)

per accident

$50,000 of residual liability insurance per person

$100,000 of residual liability insurance per accident

Michigan’s higher liability limits alongside PIP, PPI, and residual liability insurance provide great protection for the average Michigan driver, but these added benefits typically incur high insurance premiums.

Michigan car insurance companies use several rating factors to determine rates for each driver. Your age, driving record, claims history, specific Michigan ZIP code, vehicle type, and credit score can impact your premiums.

Learn More:

Your guide to the 6 types of car insurance

High rates of uninsured drivers in Michigan

A 2019 report from the III found that Michigan has the second-highest percentage of uninsured motorists.

With just over 25% of uninsured drivers in Michigan, car insurance companies face a higher risk of accidents involving a driver without coverage, and a major income loss from a lack of paying policyholders. For these reasons, Michigan car insurance policies typically incur higher premiums.

Michigan’s insurance fraud problem

While Michigan’s legislature strictly prohibits insurance fraud, the state experiences a large amount of fraudulent no-fault insurance claims.

In fact, Michigan’s

2023 Fraud Investigation Unit Annual Report

shows that 21% of bodily injury claims and 18% of personal injury protection claims appear to be fraud or build-up. Additionally, many drivers provide false personal information to receive lower car insurance rates based on their ZIP code location and overall vehicle mileage. To compensate for the financial loss posed by auto claim fraud, insurers charge higher premiums in Michigan.

Why is fraud so prevalent in the Great Lake State?
Michigan insurance law requires all auto insurance providers to resolve claims within 30 days, so this may be a contributing factor in the high return of fraudulent claims.

High rates of personal injury lawsuits in Michigan

Although Michigan’s no-fault insurance laws are meant to limit the amount of personal injury lawsuits between drivers after an accident, the state faces a different problem: drivers suing their insurance provider for no-fault insurance claims.

Yearly, Michigan insurance providers face multiple lawsuits from drivers and medical providers over unpaid claims, so insurers increase rates to make up for financial losses.

The auto industry & inflation

Michigan car insurance rates may be generally higher than the rest of the country’s, but the Great Lake State doesn’t stand alone when it comes to the pressure of inflation.

Rising vehicle values, higher repair costs, steep medical expenses, and larger insurance claims all contribute to inflated car insurance rates across the country. In fact, the

Bureau of Labor Statistics

finds that car insurance rates increase by an average of 18.9% every year, and rates have gone up substantially since 2021 in response to the pandemic.

Michigan car insurance costs

As of November 2023, Michigan auto insurance costs an average of $167 per month for state-minimum policies or $189 per month for full coverage. Those averages come out to $1,999 per year for minimum coverage or $2,272 annually for full coverage on average.

Michigan’s car insurance rates fall just above the current national average of $2,264 per year for full coverage. Here’s how Michigan’s auto insurance rates compare to a few other states:

State	No-fault or at-fault regulations?	Average cost of full coverage
Michigan	No-fault	$2,272
New York	No-fault	$3,153
Delaware	No-fault	$2,372
Florida	No-fault	$2,676
North Dakota	No-fault	$1,743
Ohio	At-fault	$1,819
Indiana	At-fault	$1,688
Idaho	At-fault	$1,704
National average	N/A	$2,264

Methodology: Jerry conducted a nationwide survey, analyzing over 25 million car insurance quotes to confirm the average cost of car insurance per state.

While Michigan car insurance rates are generally high, there are still a few ways to lower your premiums. First and foremost, comparing quotes from different providers can help you uncover the lowest potential rate for your driver profile.

The Jerry app offers an easy coverage selection process and guides you through building your profile to ensure you take advantage of discounts you might be eligible for.

Download the app to view insurance quotes that are tailored to your personal profile.

FAQs

Is Michigan the highest state for car insurance?

Michigan is not the most expensive state for car insurance, but it is among some of the most expensive. A 2020 report from the Insurance Information Institute (III) finds that Michigan is the third most expensive state for car insurance, following Louisiana and New York.

Did Michigan car insurance go up in 2023?

Yes, Michigan car insurance rates have increased in 2023. On average, Michigan car insurance rates are up by 31% since 2022, when the Michigan Catastrophic Claims Association (MCCA) implemented a rate hike.

Who has the cheapest car insurance in Michigan?

There isn’t a single insurance provider that consistently offers low rates to all drivers, but companies like Secura, GEICO, Farm Bureau, and Auto-Owners offer some of the cheapest premiums in Michigan.

What is the average monthly cost of car insurance in Michigan?

The average monthly cost of car insurance in Michigan is $167 for state-minimum policies or $189 for full coverage.

What coverage is required in Michigan?

Michigan requires $50,000 of bodily injury liability (BIL) per person, $100,000 of bodily injury liability (BIL), $10,000 of property damage liability (PDL) per accident per accident, $250,000 of personal injury protection (PIP) for medical coverage, $1,000,000 of property protection insurance (PPI) per accident, $50,000 of residual liability insurance per person, and $100,000 of residual liability insurance per accident.

What is Michigan’s insurance reform?

In 2019, Michigan altered its insurance requirements and scrapped the mandatory unlimited PIP coverage requirement. Now, Michigan residents can lower their insurance premiums by opting to use their personal healthcare insurance for medical bills rather than purchasing unlimited personal injury protection

SOURCES

https://www.michigan.gov/difs/news-and-outreach/faq/insurance/info-purchasing-auto-insurance/questions/what-auto-insurance-coverage-do-i-have-to-purchase