Car insurance is one of those necessary evils that drivers must face. It can be a costly endeavor, and there are several factors that determine just how much it is going to hurt your wallet.
The average U.S. insurance premium for full coverage car insurance is around $1,555.00 annually. Depending on where you live, however, this could be significantly more or less. Michigan, for example, has the second-highest rates in the United States.
In Michigan, the average premium for full coverage car insurance is around $3,000.00 and liability coverage will run you around $2,000.00.
Why is Michigan so high? Again, there are several factors that impact the bottom line.
Michigan is a NO FAULT state.
Michigan is a no-fault state when it comes to motor vehicle accidents. If there is an accident, an insurance claim must be made by every insured driver, regardless of who is at fault. Due to this requirement, Michigan drivers must carry Personal Injury Protection (PIP) to cover their own personal medical expenses, lost wages, etc.
Uninsured drivers create issues for insurance agencies and insured motorists alike. The insured driver, and the insurance company, generally are forced to pay the expenses regardless of whose fault the accident really was.
If you live in a fault state, the driver who is at fault is responsible for the expenses of both parties that were incurred by the accident.
A no-fault state forces the insurance companies to raise premiums to counteract the claims they must process. Perhaps as a by-product of these elevated rates, Michigan is one of the top four states to have the highest number of uninsured drivers. The cycle is a very costly one for the insured driver.
No-fault minimum car insurance is required by Michigan law. If you own an automobile, you must carry a minimum liability coverage to register a vehicle with the state. Regardless of circumstance, it is illegal to drive a car without this basic insurance.
The “No Pay, No Play” law in Michigan basically limits uninsured or underinsured drivers from seeking compensation through costly lawsuits for punitive damages, such as pain and suffering. This does somewhat protect the drivers with insurance, although this does not seem to reduce premium amounts.
How much insurance is required?
Michigan drivers usually need a minimum of $250,000 in PIP insurance; however, there are exceptions for some on Medicare and/or Medicaid. Drivers with Medicare or some other type of health insurance plan that qualifies with Michigan’s standards that covers automobile accidents may elect to opt out of PIP.
However, there is some good news for Michigan drivers. Michigan saw a 27% decrease in average rates in 2021 compared to 2020 and changes to Michigan’s auto insurance laws, removed the need for unlimited medical coverage, resulting in rate drops for some people.
Drivers need to carry at least $50,000.00 of bodily injury liability insurance per person (or $100,000.00 per each accident), $10,000.00 for coverage of any property damage caused in any other state, and a minimum of $1,000,000.00 property protection insurance policy for restitution of anyone else’s damaged property, other vehicles not included, upon an accident within the state of Michigan.
How can you save money on car insurance?
When shopping for car insurance, it’s wise to shop around and get multiple quotes before you decide on an insurance policy. In Michigan, the most affordable car insurance is through Geico, according to CarInsurance.com, and Allstate has the highest rates.
One of the key factors, after location, is credit rating. Michigan is one of the leading states for drivers with a bad credit rating. On average, a driver in Michigan with bad credit will pay over 150% more than a driver with good credit.
Michigan car insurance companies have a point system in place for various traffic violations. The points are assessed to determine your eligibility for car insurance. You can be denied a policy if you have acquired 7 points or more in a three-year period. These “eligibility points” are broken down as follows:
- Driving 11-15 mph over the speed limit – 3 points
- Driving 15 mph or more over the speed limit (careless driving) – 4 points
- Driving up to 15 mph over the speed limit on freeways having a maximum speed limit of 70 mph – 2 points
- Other moving violations – 2 points
- The first accident in which you are more than 50% at fault – 3 points
- The second and subsequent accidents in which you are more than 50% at fault – 4 points
These eligibility points can also be used to determine if the premium of your existing policy is raised for a three-year time period.
How can we help?
Michigan drivers face several challenges when it comes to car insurance, and which one is best for them. It pays to do your homework, improve your credit score, and maintain a clean driving record. Traffic Court Buddy is a group of attorneys with extensive knowledge of Michigan driving laws and can help guide you through all of the loopholes when you need legal advice. Their website is trafficcourtbuddy.com, and they will give you the dedicated service you require.
Other sources: michigan.gov