Most states require drivers to purchase property-damage and BI liability coverage that compensates others harmed by the insured driver in a crash. Michigan's higher premiums can be explained by higher claim payments, suggesting that reforms that target claiming behavior may help to address the high cost of insurance in the state. This research reviewed the unique features of the Michigan insurance system, how Michigan claims for property damage and bodily injury (BI) compare to those in other states, and implications of these claiming patterns for efforts to reform Michigan's auto insurance system. While additional price regulation provides one method for reforming Michigan's insurance system, it may not address the underlying causes of high premiums. In response to these problems, Michigan legislators and consumer groups have supported further regulations on the pricing of insurance products. In 2007, an estimated 17 percent of Michigan drivers failed to purchase such insurance, a higher proportion than found in all but eight other states. One possible consequence of this is a high proportion of drivers who have failed to purchase mandatory auto insurance. In 2007, the average annual auto insurance premium in Michigan was $928, compared to $795 elsewhere in the United States-a 17-percent difference. Introducing options or fee schedules for PIP coverage could help lead to broader, more-affordable choices, while leaving those satisfied with current coverage the ability to maintain it. Statistical models indicate that the average auto crash injury claim in Michigan is 57 percent costlier than elsewhere. One cause of these higher costs appears to be Michigan's requirement that drivers have unlimited personal injury protection (PIP) coverage. Vehicle owners are required to buy PIP insurance that will cover the medical expenses of the person whose name is on the policy, as well as any household residents if they are also injured in an auto accident.Higher auto insurance rates in Michigan lead to a high proportion of drivers without auto insurance. But as is the case in Michigan and other states with no-fault systems, car insurance has actually ended up being far more expensive.Īnother reason Michigan car insurance is so pricey, the article notes, is that personal injury protection (PIP) coverage is a requirement. Interestingly, the article points out, no-fault car insurance was originally introduced to lower insurance costs and reduce the chance of insurance fraud. “Michigan, like Florida and other states, has a no-fault system that allows drivers to recover financial losses from their own insurance company regardless of fault,” the article noted, adding that this means a driver’s insurance company will pay for his or her medical expenses even when the driver is not at-fault for the collision. To put this in further perspective, the article notes, the national average for car insurance is around $1,300-this means that drivers in Michigan pay about $1,100 more per year, on average, than people in other parts of the country.Īs for why car insurance is so expensive in Michigan, the article noted the number one reason is the state’s no-fault car insurance system. Drivers there pay almost $2,400 a year for their auto insurance the next most expensive state is Louisiana, where people pay about $1,920 a year. Īs the article noted, Michigan is consistently ranked as the most expensive state for car insurance. To read the article in its entirety, please visit. LOS ANGELES, CA / ACCESSWIRE / J/ The founders of Insurance Panda, a car insurance quote comparison tool based in New York City, are pleased to announce that they have just posted an article to their website that looks at why Michigan car insurance is so expensive. Insurance Panda Recently Posted an Article that Examines Why Michigan Car Insurance is So Expensive
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