Immediately! ...At least in theory.

Michigan drivers enjoy some of the most robust auto insurance protections in the country, featuring unlimited personal injury coverage for policyholders. This ensures that injuries from a car crash won’t cripple you financially. But all that protection comes at a cost: Michigan car insurance rates are also some of the highest in the country. At least for now.

Recent changes to Michigan no fault insurance laws are in effect as of July 1, 2020. And these changes will have potentially huge impacts on out-of-pocket prices for insurance.

Let’s discuss.

No Fault Insurance Laws

If you’ve ever wondered why is Michigan car insurance so expensive, a big part of the answer has to do with the no fault insurance laws.

These laws guarantee that injuries incurred from car accidents are covered, with no limit. Or, they used to. The changes that are now in effect make it so that you can opt out of this unlimited protection and choose a limited protection at a lower cost.

For those who choose to opt out, costs may drop significantly.

But it’s not that simple; many people choose to keep their unlimited coverage. And there are other changes along with this new option. These could impact the amount of money you spend on insurance and other car troubles in unexpected ways.

Overall, you need to understand the old law to appreciate what the new changes mean.

The Old No Fault Insurance

The no fault system was adopted in 1973. Michigan car insurance is unique in that it’s the only state that’s required any kind of unlimited coverage. Until now.

There are actually three main kinds of auto insurance required in Michigan, but only the first was unlimited in nature:

  • Personal injury protection (PIP) – This part of your insurance relates to and covers any and all costs related to injuries you sustain from a car accident. Per the old no fault laws, Michigan drivers were required to carry unlimited coverage, meaning that:

  • All medical expenses reasonably related to an accident were covered by the insurance provider, no matter what.

  • In addition, wages lost to bodily injury from a car accident were covered, up to a limit.

  • Property protection insurance (PPI) – This part of your insurance covers damage done to another individual’s property in the event of a crash. Covered properties include:

  • Houses, fences, and other residential property

  • A properly parked car—not an operated vehicle in a collision

  • Bodily injury and property damage (BI / PD) – Also known as residual liability insurance, this part of your overall plan covers lawsuits. While Michigan prohibits most accident lawsuits, accidents involving death or motorists from out of state could result in a suit. In which case, you’re covered in a 20/40/10 scheme:

  • Up to $20,000 dollars for a person who is hurt or killed

  • Up to $40,000 dollars for the accident if multiple parties are hurt or killed

  • Up to $10,000 for property damage out of state

Together, these regulations are the biggest reason even the cheapest car insurance Michigan motorists can find is still more expensive than in many other states.

The New No Fault Insurance

All those wistfully wondering when will Michigan auto insurance rate go down have finally had their voices heard. Per the new bipartisan legislation, the PPI part of Michigan insurance is no longer required to be unlimited or full coverage.

Instead, Michigan drivers can opt into a lower limit at a lower cost. Or, they can opt out of PPI completely, maximizing savings.

Per the Department of Insurance and Financial Services (DIFS), all statewide PIP coverages will undergo reductions in price. The breakdown depends on the amount of coverage policyholders opt for:

  • A 10% or more reduction in premium, per vehicle, for unlimited PIP coverage

  • A 20% or more reduction per vehicle for a $500,000 PIP limit

  • A 35% or more reduction per vehicle for a $250,000 PIP limit

  • A 45% or more reduction per vehicle for a $50,000 PIP limit

So, even the insured drive who does choose to retain unlimited coverage will see reductions in their costs. However, the changes will impact everyone differently.

Other Considerations

The changes to no fault insurance in Michigan won’t necessarily impact everyone in the same way. One major reason? People will choose different options depending on their individual circumstances.

Other reasons involve factors that drive up insurance premium costs beyond what’s required.

Besides state-mandated insurance coverages, many motorists decide to purchase additional protections, such as:

  • Collision – This insurance covers the cost of repairs to your own property (the automobile itself) in the event of an accident. While not required by Michigan law, most motorists benefit from the peace of mind it provides.

  • Comprehensive – Accidents aren’t the only way cars sustain damage. This kind of insurance covers damages from natural disasters and vandalism.

While these kinds of insurance are separate from the mandatory no fault policies, they make up a big part of your overall insurance budget. Some motorists who save money by opting out of PIP coverage may choose to reinvest those savings in other coverage options.

Ultimately, Michigan drivers have been empowered with more freedom to make decisions about their car insurance rates. And with great power comes… great responsibility.

We’re here to help you make those decisions.

The Bottom Line, Online Auto Insurance Comparison Tool

It’s time to stop asking when will car insurance go down in Michigan—and start asking questions like how can I get the best deal given the current laws.

Is unlimited coverage right for you? How much insurance do you need?

Use our handy car insurance coverage comparison tool located on the top of this page to immediately evaluate hundreds of auto insurance rates.


DIFS. Michigan’s New Auto Insurance Law: Lower Costs.\,9555,7-405-96684_96686---,00.html

DIFS. Your Guide to Automobile Insurance.

Gursten, S. New Michigan No-Fault Law Passes: What You Need to Know.