Why is Michigan car insurance so expensive? Insurance industry data shows that the average Michigan driver pays 85 percent more than the national median insurance rate for his car insurance. This makes Michigan the most expensive state for car insurance in the United States. This article highlights reasons why vehicle insurance in Michigan is so costly.
Why Is Car Insurance So Expensive in Michigan?
The following reasons are why Michigan auto insurance rates are so expensive:
No-Fault Car Insurance System
No-fault car coverage allows your insurer to cover your medical bills even when you are involved in an accident that wasn’t your fault. This added benefit is one reason why insurance costs in Michigan are so high. Insurance companies in other states like Florida, which have relatively high insurance rates, also offer no-fault coverage.
Compulsory Personal Injury Protection (PIP)
Michigan state law requires drivers to carry PIP coverage, which covers the medical expenses of policyholders and any of uninsured passengers.
Unlike other states which require drivers to use PIP, Michigan expects its residents to purchase PIP that offers unlimited benefits. The state also demands that a driver who causes an accident must provide lifetime medical benefits to injured victims. The Michigan variety of PIP is even more expensive than ordinary PIP. In Michigan, insurance companies pay an average of $555,000 for lifetime medical benefits for injured people.
High Rate of Insurance Fraud
Michigan insurance companies suffer high rates of insurance fraud every year. Reports show that about 10 percent of no-fault insurance claims in Michigan are fraudulent. Insurance experts state that most fraudulent claims request the insurer to pay injured victims’ family members for patient care or cover unnecessary medical bills.
In addition, Michigan insurance law requires vehicle insurance companies to pay insurance coverage within 30 days of receiving a claim. This short grace period may prevent insurers from conducting adequate research on supposed accident victims. Insurers in the state raise insurance rates to cover the losses they encounter due to bogus claims.
High Number of Uninsured Drivers
Michigan is one of the U.S. states with the highest number of uninsured drivers. About 20 percent of Michigan drivers lack auto insurance. To cover this income deficit, insurance companies in Michigan charge high premiums for their policies.
Frequent Occurrence of Personal Injury Lawsuits
According to mlive.com, the number of personal injury lawsuits in Michigan has increased by 130 percent in the last 10 years. Drivers and medical providers often sue auto insurers over unpaid no-fault claims.
Is Car Insurance in Michigan Expensive?
Insure.com, a notable insurance website, compiles a list of the most expensive U.S. states for vehicle insurance every year. Michigan has never ranked below third place since the website began publishing the list.
What Is the Cost of Car Insurance in Michigan?
In 2020, the average cost of vehicle insurance in Michigan was $2,878. However, the national average auto insurance premium was just $1,517. This means that the average Michigan driver pays about 85 percent more in insurance fees than their counterparts in other U.S. states, according to Compass Insurance Agency.
Why Did Car Insurance Reforms not Succeed in Michigan?
Due to the resistance of powerful medical and legal organizations in Michigan, the Insurance Alliance of Michigan’s efforts to introduce reforms have been fruitless.
The Michigan Health and Hospital Association claims that enforcing stricter regulations against insurance fraud and exorbitant auto insurance premiums is a more effective solution. Also, the Michigan Association for Justice, which consists of litigators and patient-advocacy groups, have taken steps to prevent the elimination of the unlimited no-fault coverage, according to Bridgemi.
What Are Some Proposed Car Insurance Reforms and What Are Their Pros and Cons?
Insurance experts have proposed the following reforms to regulate insurance costs in Michigan, according to mlive.com.
Make the No-Fault Insurance System Optional or Scrap it Entirely
Legislators in the Michigan State House have suggested reforms to eliminate the no-fault coverage. While this reform may reduce insurance charges, it can also lead to an increase in auto insurance lawsuits. In addition, many injured victims may not receive coverage for their medical bills, especially if an uninsured driver caused the accident.
Eliminate Compulsory Unlimited Medical Coverage for Victims of Car Crashes
If it becomes law, a Michigan senate bill will permit drivers whose health insurance covers car accidents to skip PIP coverage.
However, some legislators have advocated for unlimited medical coverage. They argue that this coverage provides essential support for injured victims. Accident victims who live in other U.S. states, where the law does not mandate lifetime medical coverage, rely on Medicare, but Mlive.com states that victims without good healthcare coverage have had to sell their assets to pay their medical bills.
Stop Usage of Unrelated Factors to Determine Auto Insurance Costs
Presently, Michigan insurers use non-driving factors, like educational qualifications and occupation, to determine insurance fees. Insurance experts say that non-driving factors may lead to an unnecessary increase in insurance rates.
Some insurance companies have resisted reforms to eliminate non-driver factors in pricing auto insurance premiums. These auto insurers argue that non-driving elements help them predict the possibility that a policyholder may be involved in a crash.
Crackdown on Fraud
Insurance-related organizations like the Insurance Alliance of Michigan, have encouraged the Michigan legislature to develop stringent measures against auto insurance fraud. The Michigan senate has already passed a bill that will establish a vehicle insurance anti-fraud committee overseen by the Michigan Police. This committee will be responsible for investigating and prosecuting suspected auto insurance fraud cases.
What Are the Top 20 Most Expensive States for Auto Insurance in 2020?
According to insurancepanda.com, the following states have the highest auto insurance rates in the United States:
Rank. State: Average Annual Rates
1. Michigan: $2878
2. Louisiana: $2839
3. Florida: $2239
4. Texas: $2050
5. California: $1968
6. Georgia: $1936
7. DC: $1928
8. Rhode Island: $1918
9. South Carolina: $1759
10. Delaware: $1757
11. Colorado: $1741
12. Montana: $1693
13. Connecticut: $1688
14. Wyoming: $1684
15. Kentucky: $1621
16. Arkansas: $1620
17. Mississippi: $1580
18. Nevada: $1570
19. New Jersey: $1558
20. Arizona: $1557
Check this out if you need additional information, resources, or guidance on car insurance.
Sources:
Why Michigan Auto Insurance Costs So Much and How to Lower It | mlive.com
How Michigan’s auto insurance premiums became the nation’s highest | bridgemi.com
Why Is Car Insurance So Expensive in Michigan? | insurancepanda.com
Best Car Insurance in Michigan: Everything You Need to Know: caranddriver.com
Michigan Car Insurance Laws: Everything You Need To Know | caranddriver.com
This content is created and maintained by a third party, and imported onto this page to help users provide their email addresses. You may be able to find more information about this and similar content at piano.io
Source link
