Auto & Bike Blog: How To Get The Most Affordable Michigan Car Insurance

Michigan has the highest average car insurance rates, sitting at $2,693 per year.
The state’s minimum car insurance requirements include personal injury protection, property protection insurance, and residual liability insurance.
In efforts to lower car insurance rates, Michigan’s auto insurance laws will undergo a no-fault reform this July 2, 2020.
Michigan’s top-rated car insurance providers include State Farm, GEICO, Progressive, and Auto-Owners Insurance.

Affiliate disclosure: Automoblog and its partners may be compensated when you purchase the products below.

When it comes to the auto industry, Michigan has many claims to fame. Its largest and most populated city, Detroit, goes by the nickname “Motor City” and is home to the “Big Three” automobile manufacturers: General Motors, Ford Motor Co., and Fiat Chrysler.

Despite its auto-friendly reputation, Michigan consistently has some of the highest car insurance rates in the country. To find out the reasons behind its high rates and more about the different coverage options available, we’ve put together everything you need to know about Michigan car insurance. Our team has also reviewed the best car insurance providers based on our extensive research.

We think you can get the best auto insurance in Michigan by shopping around. Start by collecting quotes from providers available in your area.

What Is The Required Auto Insurance Coverage in Michigan?

Michigan law states every car owner must have the basic no-fault automobile insurance to register and drive a motor vehicle in the state. Its requirements differ from other states, as they also include state-mandated charges and coverage for both in-state and out-of-state property damage.

Michigan’s minimum car insurance requirements have three parts:

Personal injury protection (PIP): Covers your medical expenses with no maximum limit, as well as up to 85 percent of any lost wages for up to three years, no matter who is at fault
Property protection insurance (PPI): Covers up to $1 million in property damages, including buildings, fences, and properly parked vehicles (does not cover damage to other moving cars)
Residual liability insurance
- $20,000 bodily injury (BI) coverage: Covers the medical expenses of other parties in accidents where you are at fault
- $40,000 bodily Injury (BI) coverage per accident: Covers the medical expenses of other parties per accident in accidents where you are at fault
- $10,000 property damage (PD): Covers property damage expenses of other parties in out-of-state accidents where you are at fault

In addition, the Michigan Catastrophic Claims Association (MCCA) also charges a reinsurance fee to help insurance providers with the sizable costs of providing unlimited PIP coverage.

Many drivers will also want to purchase other types of coverage for added protection. We think this is a smart move, if you can afford it.

Below are the four most common ones recommended by the Michigan Department of Insurance and Financial Services (DIFS):

Collision insurance: Covers property damage to your vehicle in accidents
Comprehensive insurance: Covers property damage expenses in case of falling objects, collision with an animal, environmental damage (fire, flood, etc.), vandalism, or theft
Limited property damage liability insurance: Covers up to $1,000 in property damage of other parties in accidents where you are 50 percent or more at fault
Towing and rental car coverage: Covers or reimburses the cost of towing and rental car expenses in covered events

How Michigan Car Insurance Laws Differ From Other States

Michigan operates as a no-fault state, which means all parties involved in an accident must file a claim with their own car insurance providers, no matter who is at fault.

After an accident, each party’s medical expenses will be covered by their own car insurance policy, primarily through PIP coverage. PIP covers all medical care, up to 85 percent of lost wages, and up to $20 per day in replacement services (household chores or repairs).

PIP also applies to any family member living in the policyholder’s house (even if the accident was in another person’s car), any passenger or pedestrian who does not have their own no-fault policy, and any motorcyclist hurt in an accident involving the policyholder’s car.

Why Michigan Car Insurance Is So Expensive

Michigan is known for having the priciest car insurance rates in the country, at an average of $2,693 per year, according to data from The Zebra. For some perspective, the average insurance policy in the country is $1,470, while the cheapest is found in Maine at $896.

If you live in a more populated city, your policy may be even more expensive. For example, drivers living in Detroit pay some of the highest rates seen by any city, at an average of $5,464 per year.

The state’s increased insurance rates are primarily due to its unique no-fault system, which requires drivers to carry PIP coverage for medical expenses. Unlike other no-fault states, Michigan puts no limits on its PIP coverage for the policyholder, their passengers, and family members. Injured parties are essentially given unlimited lifetime coverage of medical bills.

This system was implemented in 1973 and intended to eliminate legal disputes and speed up medical payments. However, while unlimited PIP was good in theory, it didn’t account for how expensive medical payments would become in reality.

Today, car insurance in Michigan is one of the highest in the country. A 2019 survey by the University of Michigan estimated 20 percent of the state’s drivers choose to go uninsured.

From 2020 to 2021, the state’s auto insurance laws will gradually undergo a major reform to help decrease policy rates, including different PIP coverage options (no longer just unlimited), increased limited property liability coverage, limits on medical billing, and the like.

Changes to Michigan Car Insurance

Michigan’s auto insurance laws will undergo a no-fault reform on July 2, 2020. The following are some of the key changes intended to lower the sky-high cost of Michigan’s car insurance:

5 New PIP Coverage Options

Drivers will be able to choose from five PIP coverage options, which can lower their rates but also reduce their coverage in case of accidents.

Unlimited PIP coverage with a 10 percent reduction (for drivers who want to retain their unlimited PIP coverage)
$500,000 of PIP coverage with a 20 percent reduction
$250,000 of PIP coverage with a 35 percent reduction
$50,000 of PIP coverage with a 45 percent reduction (the lowest option for Medicaid recipients)
Opt out of PIP coverage with 100 percent reduction (only if you have Medicare or a qualifying health insurance plan)

Increased Liability Coverage

Without the requirement for unlimited PIP, which covers a party’s medical bills, the minimum liability coverage will increase. Instead of the minimum liability of $20,000 per person and $40,000 per accident, drivers will now be offered a minimum of $250,000 per person injured or killed in an accident and $500,000 per accident. Drivers will be allowed to request and receive reduced minimums of $50,000 and $100,000, respectively.

Some Personal Info Can No Longer Affect Rates

Every insurance provider calculates its insured rates based on several factors. This can range from the car you drive, your age, credit score, mileage per year, and more.

After the reform, Michigan will effectively ban gender, marital status, occupation, education, zip code, credit score, and residential status from affecting an individual’s insurance rate. However, providers can still use payment history instead of a credit score, and territories as opposed to zip codes.

Mini Tort Law Change

Michigan’s limited property liability damage, also called “mini tort,” will increase from $1,000 to $3,000 for accidents where you are 50 percent or more at fault.

Imposed Limits on Medical Billing

Medical payments in the past were considerably expensive, almost $500 higher than Medicare for the same issue. To maintain a reasonable rate, Michigan will limit payments to 200 to 250 percent of what Medicare would pay.

Injured parties will also be able to sue for any unreasonably excessive medical costs, and auto insurance providers will no longer be required to pay for more than 56 hours per week of in-home, family-provided attendant care, beginning July 1, 2021.

Factors in Determining Your Car Insurance Rates

As with other states, Michigan identifies a number of factors that determine your car insurance rate. The following are the most common:

Vehicle make and model: Newer vehicles or those with tech features more costly to repair and replace may likewise incur higher car insurance rates.
Driving record: A history of traffic violations and accidents will classify you as a high-risk driver, which results in added charges in your total insurance rate.
Payment history: Those with a bad payment history are considered more likely to file claims or default on payments, and therefore usually need to pay higher car insurance rates.
Average miles driven per year: Some providers offer discounts for drivers who stay below a certain mileage each year, which effectively lowers the odds of them getting into an accident.
Driver age and experience: Younger drivers or those with only a few years of experience are seen as more reckless and usually receive higher insurance rates. On the other hand, senior drivers over 65 years must be offered reduced insurance rates, if they drive less than 3,000 miles a year.
Territory: Certain territories will result in higher insurance rates, especially those with dense populations and higher frequencies of accidents, theft, and vandalism. U.S. News & World Report found that currently, the cheapest car insurance rates can be found in Ann Arbor and Grand Rapids, at just under $2,200 per year.

Many factors determine the cost of your Michigan car insurance. Shop around to get the best deal.

Getting The Cheapest Michigan Car Insurance Rates

Although the state of Michigan is currently working to lower its notoriously high car insurance rates, the DIFS also recommends taking the following steps to get the best car insurance rates:

Shop around: It’s always a good idea to get a few quotes from the best providers in your area to compare coverage and prices. In addition to the lowest rates, look for the best coverage options available.
Increase your deductible: Deductibles are your out-of-pocket payment for any medical payments or property repairs. Although this may be costly in cases of accidents, a higher payment will result in lower monthly premiums.
Consider car insurance rates before purchasing a car: Certain makes and models may result in higher or lower car insurance rates. If possible, try to get a few car insurance quotes for any vehicle you’re considering to see how it affects your rate.
Check for any duplications: If you also have health insurance, you may be paying twice for the same type of coverage. Check that your medical expenses are only covered by one plan, and check for any discounts when purchasing a bundle from the same provider.

Discount Options

To attract more customers, auto insurance providers offer a variety of discounts for those who:

Drive an eco-friendly vehicle.
Maintain a clean driving record.
Insure multiple vehicles with the same car insurance company.
Belong to certain partner associations, companies, or organizations.
Purchase other types of insurance, such as home or life insurance, from the same provider.

Make sure to ask the agent for any discounts you may be eligible for, and take the time to find the right company for you and your needs.

Who Has The Best Car Insurance in Michigan?

Selecting for an affordable car insurance policy in Michigan can be a challenge. To jump-start your search, we’ve rounded up the best ones in the state, based on rates and reviews.

State Farm

As part of a large group of insurance companies, State Farm is the largest auto insurance provider in the U.S. It employs nearly 19,000 exclusive State Farm agents to sell its products, which can be customized to fit your coverage needs. U.S. News & World Report found State Farm’s Michigan rates to be relatively high, at an average of $2,720.33. However, this can lower greatly if you maintain a good credit score and clean driving record.

GEICO

GEICO is the second largest auto insurance provider in the country, with straight A’s across all its financial strength ratings: an A++ from AM Best, an AA+ from Standard & Poor’s, and an Aa1 rating from Moody’s. Aside from its top standing, GEICO also provides one of the cheapest car insurance policies in Michigan, with an average of $1,286.45.

Progressive

Not only is Progressive one of the largest car insurance providers in the country, but it also offers one of the most affordable and convenient policies in Michigan. The company was recently ranked number 99 in the 2019 Fortune 500 list and number 76 in the 2019 Fortune 100 Best Companies to Work For. As for insurance rates, Progressive’s average policy in Michigan is $1,584 per year, according to the Insurance Information Institute.

Auto-Owners Insurance

As a Michigan-based company (located in Lansing), Auto-Owners Insurance is the largest local coverage provider in the state. It provided insurance exclusively in Michigan for almost 20 years before expanding to 26 other states. Now, Auto-Owners Insurance enjoys an A++ rating from AM Best and an A+ from Better Business Bureau. While there are no listed rates for average policies, you can contact them to get a customized quote.

To get the best car insurance in Michigan, we recommend going with one of the top providers on our list. You can also start by getting a range of car insurance quotes by using our form below:

Want to see what’s available in your area and find your price? Get a free quote by filling out the form below.

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Original article: How To Get The Most Affordable Michigan Car Insurance