How Much is Car Insurance in Michigan?
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The short answer: a lot. American car manufacturing was born in Detroit, and the great state of Michigan is still the home of the automobile industry in the US. However, it’s also home to some of the most expensive auto insurance anywhere in the country.
But just how much is auto insurance in Michigan? This guide will walk you through what Michigan car insurance rates look like, and why.
Let’s get started.
Michigan Car Insurance Rates Vs. The Rest of the Country
Drivers in Michigan pay some of the highest rates in the entire country.
According to Business Insider, the average price of car insurance across the entire US is about $1,566 dollars per year. Compared to that figure, prices for Michigan auto insurance are much higher. Per the same study, car insurance in Michigan ranges from $1,272 dollars to $8,723 dollars per year, with an average cost of $3,343 dollars.
That’s more than double the national average!
Michigan Auto Insurance Rate Vs. Other States
Insurance prices in Michigan stand out even more in comparison to individual states.
For instance, Michigan is the only state with an average annual cost over $3,000 dollars. In comparison, no other state even comes close. In fact, only four other states have an average over $2,000 dollars per year, per the same Business Insider study:
$1,405 to $3,525 dollar range
$2,480 dollar average
$875 to $2,693 dollar range
$2,040 dollar average
Rhode Island –
$1,304 to $3,847 dollar range
$2018 dollar average
$1,257 to $3,370 dollar range
$2,007 dollar average
Michigan’s average price for auto insurance is nearly $1,000 dollars more than the next highest state’s average annual cost. That’s a huge difference!
It’s explained at least in part by the higher end of the spectrum. The high end of Michigan’s range ($8,723 dollars) exceeds the next highest state-wide price point (Rhode Island’s $3,847 dollars) by nearly $5,000 dollars—an astronomical gap.
And, the low end of Michigan’s range ($1,272 dollars) is higher than the average cost of insurance in eleven other states:
Iowa: $1,100 dollars
Washington: $1,106 dollars
Idaho: $1,122 dollars
Virginia: $1,127 dollars
Indiana: $1,166 dollars
North Dakota: $1,178 dollars
Vermont: $1,207 dollars
Wisconsin: $1,241 dollars
Alaska: $1,242 dollars
Wyoming: $1,246 dollars
Ohio: $1,249 dollars
All this is to say that, no matter the reference point, Michiganders are paying more for car insurance, on average, than most other US citizens.
But why is Michigan car insurance so expensive? Let’s take a closer look at the state average.
Average Car Insurance Cost in Michigan
The Business Insider numbers referenced above are actually more on the conservative end of estimates. According to other studies, average costs of insurance in Michigan are even higher, approaching:
$2,641 dollars for a 6-month policy
$5,282 dollars for a full year-long plan
One reason these averages are so high is that insurance on the higher end of the price spectrum exaggerates the overall average.
For instance, an average Michigan policy from Hanover is estimated to cost about $13,685 per year, whereas an Auto-Owners Insurance Co. plan averages around $1,485 annually. A USAA plan, which only current and former military personnel qualify for, is still about $1,304 dollars annually. And even that low figure is higher than the eleven statewide averages noted above.
That’s a difference of over $10,000 dollars between the higher and lower ends of what’s available. In practice, that means drastic irregularities in how average costs of auto insurance in Michigan are calculated.
Factors Impacting Average Car Insurance in Michigan
No matter what data you look at, Michigan auto insurance rates are always highest, or at least among the highest, nationwide. The reasons why depend on various factors, though. Some of these apply across the country, whereas others are unique to Michigan.
Of course, insurance prices differ for each individual motorist across the US. The factors that determine the average prices for every American driver include:
Driver’s age and sex
Record of safe (or unsafe!) driving
Make, model, and specifications of vehicle
Location—down to specific ZIP code
Certain trends emerge no matter where you live in the US. Younger drivers with spotty histories driving souped-up sports cars can expect to pay a high auto insurance premium. Older drivers with a safe history and a reasonable sedan can expect to pay less. Those truths apply anywhere across the country.
But the factors specific to Michigan are extremely important.
The biggest one?
No Fault Insurance Laws
The Michigan no fault insurance laws may be best known for making insurance more expensive statewide, but they exist for a benevolent purpose. Beginning in 1973, Michigan implemented these regulations in order to maximize protections for motorists victimized by car crashes.
These laws require all Michigan drivers to carry robust insurance, including expensive unlimited coverage for all personal injuries. Or, at least, they used to.
Recent changes to these laws have removed the unlimited requirement. However, the original breakdown of required coverages include:
Personal injury protection (PIP) – Full coverage for any and all costs related to injuries you sustain from a car accident:
All medical expenses reasonably related to an accident, with no limit.
Wages lost due to injury from an auto accident, up to a limit.
Property protection insurance (PPI) – Coverage for damage done to property in the event of a crash, except other moving vehicles, including:
Houses, yards, fences, and assets within these boundaries
Properly parked cars and other vehicles
Bodily injury and property damage (BI/PD) – Residual liability insurance coverage option for lawsuits. Michigan law prohibits most accident lawsuits; however, accidents involving death or motorists from out of state are permitted. BI/PD covers:
Up to $20,000 dollars for an individual’s injury or death
Up to $40,000 dollars for multiple casualties
Up to $10,000 for damage to property out of state
These requirements, especially for unlimited PIP, are the main reason Michigan auto insurance costs as much as it does. But, as mentioned above, these laws are changing.
So you might be wondering when will Michigan car insurance go down?
Changes to No Fault Requirements
Michigan is the only state in the country that requires motorists to acquire a comprehensive, unlimited insurance plan. Or, at least, it was.
Effective July 1, 2020, the infamous no fault insurance laws are no longer as restrictive as they used to be. Instead of being forced to purchase mandatory unlimited PIP benefit coverage, motorists will be given the option to choose a less protective, cheaper option. In fact, they can even choose to opt out of PIP coverage completely, reducing that cost to $0 dollars per year.
According to the Department of Insurance and Financial Services (DIFS), all PIP insurance policies coverages will be more affordable, by considerable margins. Discounts include:
10% or more off, per vehicle, for the unlimited PIP option
20% or more off, per vehicle, for the $500,000 limit PIP option
35% or more off, per vehicle, for the $250,000 limit PIP option
45% or more off, per vehicle, for the $50,000 limit PIP option
These steep discounts are part of a bipartisan effort to lower costs for all drivers in Michigan.
However, there are also many other factors that impact the overall out of pocket expense paid for insurance covered. It goes far beyond what’s legally required.
In addition to what’s required by the no fault laws, new and old, many motorists choose to purchase additional insurance to cover damage to the car itself.
While Michigan does require you to insure yourself against injury damage to your person, coverage for damage to your vehicle isn’t required by state laws. However, most drivers elect to purchase at least basic coverage for damages, including:
Collision coverage – Compensation for damages to your car in the event of an accident.
Comprehensive coverage – Financial protection for damages outside of your control, like vandalism or natural disasters.
In addition, there are numerous other coverages and features you may consider when buying insurance. A great question to consider is how much insurance do I need?
For this question and any others you may have about car insurance, we’re here to help.
Save Money on Car Insurance in Michigan
Here at Online Auto Insurance, our mission is connecting you to the insurance company or insurance provider that is the perfect fit. We’re also committed to helping you save as much as possible on auto insurance, in Michigan and anywhere else in the US.
We’re confident that we can connect you to the perfect insurance rate plan for your situation. Use our rate finder on the top of this page to find your perfect fit now.
DIFS. Your Guide to Automobile Insurance. https://www.michigan.gov/documents/difs/Auto_Insurance_Guide_448003_7.pdf
Fitzpatrick, M. Best Car Insurance rates in Michigan. \ https://www.valuepenguin.com/best-cheap-car-insurance-michigan
Gursten, S. New Michigan No-Fault Law Passes: What You Need to Know.\ https://www.michiganautolaw.com/blog/2019/05/24/new-michigan-no-fault-law/
Knueven, L. The Average Cost of Car Insurance in the US.\ https://www.businessinsider.com/personal-finance/average-cost-of-car-insurance
1. Fitzpatrick, M. Best Car Insurance rates in Michigan. https://www.valuepenguin.com/best-cheap-car-insurance-michigan