Why Is Michigan Auto Insurance So Expensive

Michigan residents pay a heavy amount in auto insurance bills. This article discusses in detail all the reasons behind Michigan’s high insurance rates.

Financial protection is every person’s basic right and auto insurance is one way to claim it. But if you live in Michigan, then getting insurance coverage is not as easy as you are thinking.

Michigan charges the highest car insurance rates among all states in America. Its citizens have to pay around $400 more in insurance bills as compared to what an average American living in any other state pays. In 2019, Michigan’s average annual car insurance rates moved up to around $3000 depicting almost 7% increase from last year.

The average annual car insurance premium of Michigan is also four to five times higher than the other states with high auto insurance rates.

Even more interesting is the fact that citizens of Detroit, a city in Michigan, have to spend almost 18% of their total income to pay their annual insurance bills. This pretty much sums up why the total percentage of Michigan’s population that prefers to remain uninsured is 20% whereas almost 60% of people in Detroit alone have never availed car insurance.

But why are Michigan car insurance rates so high? And why are other states offering cheaper rates than Michigan? Let’s have a deeper look at all the reasons behind Michigan’s high auto rates.

Michigan Insurance Laws & Regulations

Although Michigan insurance companies charge expensive prices for their auto insurance packages, at the same time they also offer complete security to their subscribers through unique and amazing services and benefits.

There are a variety of policies offered to people to ensure that they remain satisfied with the value they are getting by investing such a high amount as an investment cost. Following are top 2 policies in which the services that Michigan offer no other state offers:

No-Fault Car Insurance Policy

Michigan has a no-Fault car insurance policy which means that the insurance company will cover your medical expenses in case of an accident regardless of the fact that you were at fault or not. Michigan is one of the 12 states in America that offers a no-fault policy. The rest 38 states deny your insurance right if you are in any way found responsible for the accident.

The benefits included in the no-fault car insurance policy include the following:

  1. All reasonable medical bills will be paid by the insurance company for a lifetime.
  2. In case, a serious accident occurs and you are unable to earn money then the insurance policy also covers up to 85% of the lost wages for a maximum of consecutive 3 years after the accident.
  3. If there is a serious injury, you will get a full-time attendant to take care of you and your needs for 24 hours a day throughout your entire life.
  4. If you are unable to do house chores, then the insurance company will pay you $20/day to hire a person to do laundry, clothes, etc.
  5. Reimbursement of the traveling expenses as per the total number of miles covered to and from the doctor.

Personal Injury Protection (PIP)

All drivers in Michigan need to purchase a Personal Injury Protection policy that not only finances their medical expenses but also extends coverage to their household in case of an accident.

There are different level of PIPs offered:

  1. The insurance company will cover only those costs that are not covered by your primary health coverage;
  2. If your primary health coverage covers 70% of your lost wages, then the insurance company will cover the remaining 30%;
  3. Your insurance company will cover both medical costs and wage loss expenses;
  4. Your insurance company will pay your complete medical bills

Although other states also offer a Personal Injury Protection policy to their citizens, they all have placed limits on the coverage. Whereas, Michigan covers all medical expenses incurred due to auto accidents. Your insurance company covers medical expenses up to $555,000 and if the amount exceeds this value, then Michigan Catastrophic Claim Association (MCCA) pays the rest.

Michigan Insurance Fraud Cases

One main reason why Michigan car insurance rates are so high is because of those people who do not use these resources honestly for the right purposes they are actually meant to be used for. Below are few ways people in Michigan use insurance services and benefits in a wrong way to fulfill their unnecessary needs:

Insurance Fraud

This is a big issue that has resulted in high premium insurance costs. Almost 10% of the total insurance claims made in Michigan are fake. These fraud cases include non-essential medical treatment, lost income claims, etc.

Uninsured Drivers

Around 21% of total drivers in Michigan drive without any insurance which results in insured drivers paying higher rates. There are no proper laws in Michigan to keep a track on uninsured drivers.

When a person needs to renew his insurance, the insurance company then demands proper proof to check your insurance history. In case, a person fails to submit all proofs then there is a wide list of penalties for him including a fine of at least $50, license suspension & cancellation and more depending on each individual case.

High-Risk Areas

Some areas especially in Detroit city have reportedly higher car snatching cases due to their dense population. In order to reduce risk in these areas, insurance companies have to divide risk among all drivers. This risk division results in higher costs no matter whether the driver lives in that certain area or not.

Michigan Insurance Reforms

It is never an easy task to analyze the flaws in systems and change them. However, we have analyzed a few options that if implemented can result in lower insurance rates for Michigan residents.

Change No-Fault Policy

The biggest reform to make Michigan car insurance rates affordable for all will be to make changes to the no-fault car insurance policy as this policy is unfair for most of the people. Even if you are not responsible for the accident, you have to pay the insurance bills.

If only the person at fault has to pay the bills, then this will not only help in reducing the overall insurance costs of innocent drivers but will also improve the overall driving patterns of the state. When a bad driver has to pay from his own pocket for his insurance, he will try to drive more carefully next time. This will ultimately result in reduced car accidents and the burden of on insured drivers will also lower making space to cut Michigan car insurance rates to make it affordable for all.

Only Consider Driver Factors to Price Insurance

The insurance companies also include other factors unrelated to driving like education, house ownership, etc. which result in increased auto insurance rates. Therefore, it is recommended to keep an auto insurance policy restricted to driver factors only so everyone can easily afford it.

Improve Communication Between Health & Auto Insurance Companies

Health insurance companies have to pay lesser prices for medical services as compared to auto insurance companies. Better coordination between both means that in case of an accident, a person can avail his health insurance first. This would result in reduced auto insurance costs as medical costs associated with car insurance companies are higher than health insurers.

How to Lower Michigan Car Insurance Rates

After discussing all the reasons behind high auto insurance rates in Michigan, we have combined few tips to help you lower your insurance rates:

  1. When you go to an insurance company, do not forget to ask them about the ongoing bundling deals and discount offers for drivers with good past records. Oftentimes, there are special promotional offers going on so there is no harm in asking for one to try your luck out!
  2. Thoroughly analyze all individual benefits and associated costs of the insurance package and eliminate unnecessary ones to reduce the rates.
  3. Sometimes different providers offer different costs. So, it is always better to do some research beforehand and go for the safest and cheapest option that fits all your needs and requirements.


If you are a car owner who lives in Michigan, then it is definitely not easy for you to get insurance for your car. Michigan is the number one state in the United States of America with the highest auto insurance rates followed by Louisiana.

Michigan has certain insurance laws and regulations that somehow justify the high costs associated with its auto insurance. Some cities like Detroit, which are the most expensive are so because of their dense population which gives rise to several crimes including car theft etc. and as a result insurance companies have to keep their rates higher in such countries to adjust risk.

However, Michigan failed to keep any proper checks on fraud cases and uninsured drivers which resulted in insured drivers paying higher costs. Moreover, there is a need for newly updated reforms to reduce Michigan car insurance rates. The no-fault policy should be changed as it makes it hard for good drivers who only have to claim their insurance policies because of the accidents caused by other drivers who are at fault. Other reforms can be to improve communication between health and auto insurers and to eliminate non-driver factors from auto insurance packages to reduce costs.

All in all, you can use certain ways to lower costs by analyzing different insurance providers and their offered packages. After properly understanding different insurance deals, you should then choose the one that best fits your needs.

This article discusses all the reasons behind Michigan car insurance rates being super high. It also provides you a quick four steps guideline to help you choose the best insurance policy while keeping yourself away from uninsured drivers.

Tony Bennett

Tony Bennett

Tony Benett makes his living in the insurance industry by teaching and consulting. He is also recognized by the legal profession as an expert on insurance coverages. His insurance experience includes having worked at the company level, owned an independent general agency and having worked for an insurance association. He has received various certificates over the past few years and helps his clients and readers by giving them a realistic outlook on what they can expect to achieve within their set targets. At Insurance Noon, he is known for his in-depth analysis and attention to details with accuracy. He has been published as one of the most referred agents by his peers in the insurance community. Tony loves the outdoors and most sport events. His passion other than providing excellent advice is playing golf.

Insurance Noon is the world's leading source of insurance related content on the web, focusing on industry news, buying guides, reviews, and much more.