Drivers in Michigan pay an average of $3,356 per year for full auto insurance coverage. Although not the highest, Michigan does have some of the highest auto premiums in the United States.
Why does Michigan have some of the highest auto insurance costs in the country? More importantly, how does this impact you if you’re injured in a crash? This article breaks down the key factors driving these costs, explains how Michigan’s no-fault insurance system affects personal injury claims and offers strategies to help you stay protected while keeping your premiums manageable.
Reason #1: Michigan’s No-Fault Insurance System
Michigan has operated under a no-fault insurance system since 1973. The goal was to reduce lawsuits by requiring each driver’s insurance to cover their own medical expenses and damages, regardless of who caused the crash. While this system ensures immediate medical coverage and quick payment of wage loss, it also increases the cost of insurance.
For decades, Michigan’s Personal Injury Protection (PIP) coverage provided unlimited lifetime medical benefits for auto accident injuries. This guaranteed access to critical care but also drove up claim costs. Beginning in July 2020, individuals could select different levels of PIP coverage.
After no-fault reform, which gave drivers the option to select lower PIP limits (as low as $50,000 for some), the costs for medical coverage decreased. However, many still choose higher coverage to avoid the risk of overwhelming medical bills. For injured drivers, understanding these insurance choices is extremely important, not just for cost savings but also for ensuring access to medical care and financial support after an accident.
Reason #2: High Minimum Insurance Requirements
Michigan’s auto insurance laws require higher minimum coverage limits than most states, which helps ensure drivers have adequate financial protection in the event of an accident. However, these higher limits come with a cost in the form of higher auto premiums.
At present, Michigan drivers must carry at least $50,000 in bodily injury liability per person and $100,000 per accident, and $10,000 in property damage liability. Personal injury protection (PIP) coverage starts at a minimum of $250,000. However, many drivers opt for unlimited coverage to guard against catastrophic medical costs. Uninsured/underinsured motorist (UM/UIM) coverage is optional but highly recommended for added financial security.
In comparison, neighboring states like Ohio and Indiana impose far lower requirements. Ohio’s minimum bodily injury coverage is just $25,000 per person, and Indiana requires the same $25,000. While these lower thresholds contribute to cheaper auto insurance premiums in those states, they also offer much less protection in serious accidents.
For insurers in Michigan, these higher limits mean preparing for larger payouts, especially concerning PIP claims. To balance this risk, they charge premiums that reflect the financial exposure. For drivers, the trade-off is clear: you’re paying more upfront, but you’re also better protected in the event of a serious accident.
Reason #3: Unchecked Insurance Carriers
Insurance carriers in Michigan have a regulator, the Department of Insurance and Financial Services (DIFS). This regulator oversees the approval of auto insurance rate increases by the various auto insurance companies.
The mission of DIFS “is to ensure access to safe and secure insurance and financial services fundamental for the opportunity, security, and success of Michigan residents, while fostering economic growth and sustainability in both industries.”
Although this is a noble mission, DIFS is overwhelmed and frankly the regulation of insurance should be on its own, like in many other states. As a result, insurers ask for and receive the rate increases they want. Rarely is a request for a rate increase challenged, let alone denied.
This has allowed the carriers to increase rates at whatever pace they want to ensure strong profitability.
Reason #4: Uninsured Drivers in Michigan
Almost 25% of Michigan drivers are uninsured, one of the highest rates in the U.S. High average auto insurance premiums push some drivers to skip coverage altogether. When uninsured drivers cause accidents, the financial fallout lands squarely on those who follow the rules and carry insurance. Auto insurance companies, in turn, raise premiums to cover these economic losses, making it even harder for some people to afford accident coverage.
Here’s where uninsured/underinsured motorist (UM/UIM) coverage becomes a smart move. Adding it to your auto insurance policy ensures you’re protected financially if you’re hit by a driver who doesn’t have enough (or any) of the required coverage.
It will add a bit to your premium, but without UM/UIM coverage, you could be stuck paying out-of-pocket for accident injuries, damages, or even medical bills if the uninsured motorist can’t cover the costs. With it, you’re protected against a situation that’s all too common on Michigan roads.
Reason #5: Michigan’s Harsh Winter Driving Conditions
Michigan winters can be brutal. Between the ice, snow, and freezing rain, it’s no wonder the state sees thousands of accidents every year. Lake-effect snow, especially in areas like Grand Rapids and the Upper Peninsula, can dump unexpected and intense amounts of snow, creating unpredictable weather events and harsh conditions for driving.
The result? Higher accident rates, more claims for property damage and bodily injuries, and rising auto insurance premiums for everyone. Auto insurers brace for these seasonal spikes by building the increased risk into their pricing, which means Michigan drivers pay more to cover the average cost of winter collisions. But beyond the financial impact, these accidents leave real people dealing with medical bills, lost wages, and long recoveries.
While you can’t control the weather, you can reduce your risk. Snow tires improve traction, and regular maintenance (like checking brakes and tire tread) helps keep your car winter-ready. Features like traction control or all-wheel drive help, but cautious driving is the most effective safety measure. In stormy conditions, slow down, leave extra space, and remember: no destination is worth an injury.
If you’re hurt in a winter crash, knowing your rights under Michigan’s no-fault system is key to getting the medical care and compensation you need.
Reason #6: High Rates of Deer-Vehicle Accidents
Michigan sees over 58,000 deer-related crashes every year, making it one of the worst states for deer-vehicle accidents. When a deer suddenly appears on the road, drivers often swerve to avoid it, leading to even more dangerous situations like rollovers or collisions with other vehicles. These accidents don’t just result in costly car repairs—they can cause serious injuries, leaving drivers and passengers facing medical bills, lost wages, and long recovery times.
Comprehensive insurance typically covers vehicle damage from deer collisions, but there’s a trade-off. The high number of claims in Michigan increases insurance costs for all drivers. Even with coverage, an accident can mean out-of-pocket expenses, medical treatment, and time off work.
To reduce your risk, stay alert, especially at dawn and dusk when deer are most active. Drive cautiously in rural or wooded areas, and remember that where there’s one deer, more are likely nearby. If you’re injured in a deer-related crash, understanding your rights under Michigan’s no-fault system can help you get the medical care and compensation you need.
Tips to Save on Auto Insurance in Michigan
While Michigan’s rates are undeniably high, there are ways to reduce your premiums.
1. Shop Around Regularly
Auto insurance companies assess risk differently, so comparing quotes can lead to significant savings. Each provider uses its own formula to calculate rates, meaning one company might see you as low-risk while another doesn’t.
For Michigan drivers, where high premiums are the norm, switching to an insurer that rewards a clean driving record, lower mileage, or safe habits can make a big difference.
Beyond pricing, choosing the right insurance impacts your protection after an accident. A lower premium doesn’t always mean better coverage, especially when it comes to Personal Injury Protection (PIP) and medical benefits under Michigan’s no-fault system. Understanding policy limits is key to ensuring you have enough coverage if you’re injured in a crash.
2. Raise Your Deductible
Raising your deductible can lower your monthly auto insurance premium, but it also means paying more out-of-pocket if you’re in an accident. Insurance companies view higher deductibles as a sign that you’re less likely to file small claims, which reduces their risk – and your cost.
For Michigan drivers, where no-fault insurance already comes at a premium, increasing your deductible from $500 to $1,000 could cut your rate by as much as 30%. However, this strategy works best if you have savings set aside to cover the higher upfront cost in case of an accident.
Before adjusting your deductible, consider how it impacts your financial protection after a crash.
3. Get Usage-Based Insurance
Usage-based insurance (UBI) rewards drivers based on their actual habits behind the wheel. These programs track mileage, braking patterns, and speed through a mobile app or an in-car device, helping insurers assess risk more accurately. For drivers in Michigan, where premiums are high, this can be a way to lower costs without sacrificing coverage.
Suppose you drive less frequently or practice safe driving habits. In that case, insurers consider you less likely to be involved in an accident, which can lead to discounts.
4. Bundle Policies
Bundling insurance policies can lower auto insurance costs while keeping coverage under one provider. Many insurers offer discounts when you combine auto and homeowners or renters insurance, helping you save without sacrificing protection. Insurance companies want to keep customers long-term, so they offer bundling discounts that can reduce premiums by 10% or more.
For Michigan drivers, where auto insurance rates are among the highest in the country, bundling can be a smart way to manage costs while maintaining strong Personal Injury Protection (PIP) coverage under the state’s no-fault system.
When shopping for insurance, ask about bundling options, but don’t assume the first offer is the best. Compare the combined rate against separate policies to ensure you’re actually saving money. Lowering premiums is important, but having the right coverage after an accident matters even more, especially when medical bills and lost wages come into play.
5. Drive a Safer Vehicle
The type of car you drive affects your auto insurance costs. Insurers charge lower premiums for vehicles less likely to be involved in crashes or have lower repair costs. Cars with high safety ratings, low theft rates, and affordable parts typically cost less to insure, making them a smart choice for Michigan drivers.
SUVs and sedans with advanced safety features often come with lower premiums, while sports cars and luxury vehicles are more expensive due to higher repair costs and increased accident risks. Choosing a car with strong crash test ratings and built-in safety tech
Questions? Get a Free Consultation From a Michigan Car Accident Lawyer
Michigan’s average auto insurance rates remain high due to its no-fault system, lack of insurance company oversight, and environmental factors. While reforms have slowed the pace of rate increases, premiums remain a challenge for many drivers. By understanding what drives these auto insurance costs and implementing smart savings strategies, you can potentially reduce financial difficulties while staying protected on the road.
Having said that, accidents can still occur despite your best efforts. You may be a safe driver, but all it can take is a moment of distraction or too many drinks for another motorist to leave you with a totaled vehicle, catastrophic injuries, and high medical costs.
If this happens to you, please call the experienced and compassionate car accident attorneys at the Lee Steinberg Law Firm. Your initial consultation is free, and you only owe attorney fees if we win your case.
For more information or to get started, please call 1-866-511-0594 or contact us online today.