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Why is car insurance so expensive in Michigan?

I’m moving from my small town in Iowa to Michigan, but I nearly had a coronary seeing how outrageous Michigan insurance prices are, especially compared to Iowa’s. Why is car insurance so expensive in Michigan?

avatar
Jason Tushinski · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Michigan
’s high insurance rates stem from the state’s no-fault status, mandatory unlimited
personal injury protection
(PIP), the state’s high number of uninsured drivers, high instances of insurance fraud, and many lawsuits filed against car insurers.
Now, since you nearly had a coronary (but actually didn’t, thank heavens), keep reading as we unpack the reasons for Michigan car insurance being so pricey.
  • Michigan is a no-fault state, meaning that you will go to your own insurer when you’re involved in an accident, even when it’s not your fault. Insurers raise their rates in order to offer this added benefit
  • Personal injury protection is mandatory in Michigan, and drivers are expected to purchase unlimited benefits. PIP covers both policyholders and any uninsured passengers in case of an accident, and the unlimited benefits mean insurers could be on the hook for paying a severely injured person’s medical bills for the rest of the person’s life.
  • Between 20% and 25% of Michigan drivers are uninsured. The cost to cover these drivers is passed onto policyholders, and insurers raise rates because of this.
  • Unfortunately, Michigan sees a large amount of insurance fraud, with an estimated 10% of claims filed fraudulently. Insurers are forced to pay quickly as the state gives just 30 days to pay, and some people try to take advantage of the fact that it’s difficult to do due diligence in such a short period of time.
  • Personal injury lawsuits went up by 130% over the last decade, and insurance companies are often sued over unpaid at-fault claims. Raising rates is one way insurers keep pace if they’re dealing with a significant number of lawsuits.
So, in a nutshell, Michigan car insurance is expensive, but it’s still required by law. To help you save money, compare quotes for free on the
Jerry
app, so you can find the best rate on the coverage you need. The average Jerry user saves more than $800 per year on car insurance!
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.

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