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Modern House



Michigan car insurance, probably one of the BIGGEST complaints about the state of Michigan. With that being said, I’m going to break down why it costs so much, what the new auto insurance law is, and how you can save A TON OF MONEY when you quote your next auto policy. Let’s get to it!

Before I jump headfirst into this breakdown, I want to throw a disclaimer out there. I am in no way, shape or form an insurance agent by any means, I’ve worked with a few, some were right, some were wrong, so I will be basing this off Michigan law and personal experiences.

This blog is a direct transcript from the video below. This comes in 3 versions: You are able to watch the video, read the blog for your convenience or listen to the audio experience (which is linked under the video below).

Let me preface this with a breakdown of why Michigan has earned the reputation for disgustingly high car insurance. First off, just like any other state, they require you to purchase a minimum level of car insurance, and the biggest factor to the high insurance costs in Michigan is personal injury protection or PIP coverage. Also known as no-fault insurance. This coverage would help you cover expenses such as: medical bills, injured passengers, funeral costs, lost wages, survivors loss, etc. no matter who was at fault for the accident. On top of that, this coverage may also help with your health insurance deductible. The other minimums for required coverage are $100,000 for bodily injury, total per accident, $50,000 for bodily injury, per person per accident and $10,000 for property damage per accident. There are also optional coverages that can definitely add up, so be sure to really consider whether or not you truly need them, such as: Comprehensive Coverage, Collision Insurance, Uninsured Motorist Property Damage Insurance, Uninsured Motorist Bodily Injury Insurance, Roadside Assistance, Towing Insurance, and Transportation Expense.

Prior to July 1st, 2020, the state of Michigan required all drivers to buy unlimited Personal injury protection (PIP) as a part of their car insurance, which made the state of Michigan hit several headlines across the country stating their insurance premiums were well over $5,000 on average. While the premiums were definitely high, Michigan’s car insurance coverage was arguably the best in the country for anyone who found themselves injured in a car accident, but that of course came with a cost, but unfortunately, that came with very expensive downsides, as this method attracted fraud, costly medical claims, and endless legal battles between all parties involved.

In order for the insurance companies not to drown, they raised their rates to cover those high ticket expenses, and before the 2020 went into effect, Michigan residents were paying 4.8% of their income on car insurance, when the rest of the country was paying around 2.4% of their income on average.

Michigan was also known to have the second highest number of uninsured drivers, which accounted for nearly 26% of the drivers on the road, which is twice as high as the national average. Of course, this is a given, because with premiums as high as they were, I could only imagine the debate was whether or not to pay the mortgage or the car insurance. With that in mind, when someone who is uninsured gets in an accident, the driver who has the insurance would be left to cover the damages through uninsured motorist insurance, which was something else that drove Michigan premiums higher than any other state. Unfortunately, most people from out of state didn’t hear of the 2020 law that passed in 2020, so they are under the misconception that Michiganders are paying for car insurance with their arms, legs and first born child.

So how exactly did this 2020 law change things? Governor Whitmer signed this policy to lower costs, while maintaining the highest coverage options in the country. Drivers beyond July 2020, were able to choose a personal injury protection coverage option that fit their needs and budget, without having to pay for the unlimited option, which is something Michigan still offers, and is the only state where that continues to be an option. There was also a premium reduction put into place which would drive the rates down for 8 years and a Michigan driver's premium would depend on their individual circumstance and the coverage they select.

What that means according to the Sam Bernstein law firm is you have 6 options for personal injury protection from unlimited to $0 in coverage for those enrolled in Medicare. You can still opt out of PIP medical coverage even if you aren’t on Medicare, you just need to fulfill certain conditions. This option is also known as “Limited PIP Medical Coverage of $250,000 with Exclusions.” It allows policy holders who choose the $250,000 benefit level to opt out of PIP medical coverage for themselves, a spouse or resident relative. In addition to that, the excluded person(s) must have their own qualified health care coverage (excluding Medicare and Medicaid) that covers motor vehicle accident injuries. Anyone who is excluded will have no PIP medical coverage under the No-Fault policy.

With medical costs skyrocketing, many lawyers have come forward and told Michiganders to really think about what they’re doing when they opt out of PIP altogether, because in 2020 when that law passed, Michiganders were so burnt out from paying for insanely priced car insurance, that they jumped to simply opting out, especially when their health care coverage qualified to do so. Back and traumatic brain injuries are at the top of the two major injuries that occur during auto accidents, which can lead to financial care into the millions over the course of someone's life. So if you opt out completely, you will have to handle all the deductibles, copays and even when those limits are hit, you may still not get all your medical costs covered. So before you jump to opting out altogether, be sure to chat with a reputable insurance agent in Michigan (I know a few if you’re curious) to see what option would be best for you, because god forbid you opt out completely, just to get into a car accident, with life threatening injuries you’ll never be able to pay back.

Another aspect I want to touch on in the new law is the fee schedule. There was implementation of this schedule to control the costs that medical providers may charge auto insurers, so overall, auto premiums are more affordable, but the services for existing and future accident victims are entitled will not be affected.

To break that down further, Michigan Auto law stated that, For other providers whose treatment and care is not by the Medicare pricing structure, their charges and/or reimbursement rates will be set at 55% to 52.5% of what they charged on January 1, 2019.

Prior to 2019, there was no Michigan No-Fault medical fee schedule. The amount that doctors, hospitals, clinics, rehabilitation specialists and attendant care providers were paid for caring and treating car accidents is the amount that they charged so long as it was a “reasonable amount” and was not more than they would “customarily” charge in cases that did not involve insurance.

The new law also increases consumer protections, especially in the fraud, fines, and penalty department. There’s a new fraud investigation unit that investigates criminal activity related to the insurance industry. The insurance industry is subject to much higher fines and penalties for certain violations, and auto insurance rates need to be approved prior to being offered to consumers. On top of that, there was an elimination of certain non-driving factors as well that prohibits auto insurance companies from using sex, marital status, homeownership, credit score, educational level, occupation, and zip codes in setting rates.

Just to unpack that a little more, there are still persistent racial disparities in the auto insurance industry, but this law was a step in the right direction, but it still has a little ways to go before it can truly benefit all the residents in Michigan.

So how can you save on car insurance in Michigan? Well, for starters, you’ll want to shop around for auto insurance quotes, don’t just commit to the first one you do because it’s convenient for you, because you’ll end up paying thousands more a year than you have to. The misconception that a lot of people have is that all insurance companies are the same give or take a few dollars, but that couldn’t be any farther from the truth. I have quoted car insurance for all the same coverage and it came out to be almost twice what I was paying a year. SO make that the first priority.

I know it’s a hassle to get a ton of quotes from all these different websites, so consider using sites like MoneyGeeks or the Zebra to present you with quotes from multiple providers to truly help you weigh your options. They aren’t perfect by any means, but they will be a great starting point to figure out which companies overcharge and which ones don’t.

Secondly, consider asking for discounts and seeing if you can bundle your policies. Just like every actor or actress on any insurance commercial says, “save money when you bundle.” so look into bundling your home, auto, motorcycle, etc. and see if you’ll get savings because 10 times out of 10, you will, even if it is just a few dollars. As far as discounts, there’s so many out there from safe drivers, loyal customers, or students, you just need to look it up or ask an agent when you’re chatting with them. Thirdly, consider increasing your deductible, which is the money that would pay out of pocket when you make an insurance claim. It can definitely affect your rates, so when you’re messing around with insurance quotes, see the price difference when you go from a $250 deductible to a $1000 one.

With so many people working remotely these days, and not driving out and about as much as they did before, Moneygeek brought up a great 4th tip. Consider a pay as you drive or pay by the mile coverage. Insurance companies calculate the premiums for the plans based on the amount of miles you actually drive, so this method can significantly cut your costs, especially if you drive around the national average of 13,000 miles a year. So just like Liberty Mutual says, only pay for what you need. It applies here too.

I know I just threw a lot of information your way, so I'll link a bunch of resources in the description so you can refer back to them at anytime.


→Michigan Government FAQ's:

→New Auto Insurance Law:

→Michigan Car Insurance Breakdown:



Andrew McManamon is a Michigan REALTOR® with Signature Sotheby’s International Realty and provides real estate services to Buyers, Sellers and Investors throughout SE Michigan including Livingston County, Oakland County, Washtenaw County, Genesee County & beyond. Andrew has become one of the rising stars of Michigan real estate agents. Prior to his real estate career Andrew was responsible for managing a senior living facility in Brighton, Michigan as a dining supervisor and an activities assistant. Andrew’s passion to help people is unlike any other, and he continues to strive to be best resource he can be. Andrew graduated from Cleary University in Howell, Michigan with a double major and currently resides in White Lake, Michigan.

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