Oct. 23, 2018

Michigan Car Insurance Rates 83% Higher Than National Average, The Zebra Reports

Michigan Car Insurance Rates 83% Higher Than National Average, The Zebra Reports

As elections approach, new independent study details causes, proposed fixes for Michigan’s car insurance crisis and learnings for rest of nation

The Zebra, the nation’s leading insurance search engine, today released the most comprehensive, independent research to date about the causes and rippling impact of exorbitant car insurance rates in Michigan, the most expensive state for car insurance:

  • Michigan drivers pay $2,610 each year on average, 83% higher than the national average of $1,427.
  • Car insurance premiums exceed $6,000 and comprise up to 20% of annual income in some Michigan cities.
  • Detroit car insurance rates are three times higher than rates in some more rural parts of the state.

The report reveals auto insurance pricing data across the state and country, and explores how Michigan’s uniquely high car insurance costs came to be, what efforts have been made to fix them, and what protections are at stake in Michigan’s upcoming gubernatorial elections. 

Why Car Insurance Rates in Michigan Are So High

Michigan is a “no-fault” state, meaning a driver’s own insurance company is required to pay for injury-related expenses after a crash, regardless of whose fault the crash was.

  1. Michigan is unique in that it requires drivers to buy high levels of car insurance coverage — notably Personal Injury Protection (PIP) insurance with unlimited, lifetime medical coverage for injuries. 
  2. The unlimited nature of these benefits, coupled with rising health care costs, results in high medical claims, exacerbated by lawsuits, abuse of benefits, and high rates of fraud. 
  3. Insurance companies raise car insurance premiums to account for their losses from those costly PIP claims.

“If you already dread paying your car insurance premium, just think of how frustrating paying double or even triple that amount would be. That’s what Michigan drivers are facing, and that’s why car insurance has become such a massive political issue. Something needs to change,” says Alyssa Connolly, Direct of Market Insights at The Zebra. “No doubt the entire country — especially the dozen other no-fault insurance states — should pay close attention to the issue, the data, and the impact politics can have on car insurance.”

Elections 2018: Michigan Auto Insurance Reform Proposals 

In 2018, residents in Michigan have made auto insurance reform a top-four issue in the November elections. The Zebra’s report examines the fixes candidates are proposing for the Michigan car insurance system and how they would impact the lives and finances of Michiganders:

  1. Limit the “unlimited” medical benefit requirements.
  2. Create a medical fee schedule, similar to states such as New Jersey.
  3. Prohibit insurers from using certain information when setting rates, such as non-driving factors including gender, marital status, occupation, education, and credit score.
  4. Create an anti-fraud authority to conduct background checks of insurance licensees, collect and maintain fraud claims, and coordinate with police in criminal investigations.
  5. Replace no-fault car insurance with a tort system, like neighbor state Ohio where drivers pay half as much in annual premiums.

For the full report, including original rate data, visit TheZebra.com/resources/research/michigan-car-insurance-crisis/. 

About The Zebra 

The Zebra is the nation’s leading auto insurance search engine. With its dynamic, real-time quote comparison tool, drivers can identify insurance companies with the coverage, service level, and pricing to suit their unique needs. The Zebra compares more than 200 car insurance companies and provides licensed agent support and educational resources to ensure drivers are equipped to make the most informed decisions about their policies. It’s “insurance in black and white.”