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).

Disclaimer: I am not a licensed insurance agent or insurance advisor. The information in this article is based on publicly available sources, general Michigan insurance guidelines, and my experience helping people relocate to Michigan. Auto insurance laws and coverage options can vary depending on your individual circumstance. Before making any decisions about your auto insurance, PIP coverage, or policy changes, please consult with a licensed Michigan insurance professional for guidance specific to your situation.

Let me preface this with a breakdown of why Michigan has long earned the reputation for having extremely high car insurance rates, especially compared to other states. Michigan — particularly Southeast Michigan, Metro Detroit, and the broader lower peninsula — has historically sat near the top of national rankings for auto premiums. And the main reason comes down to one thing: Personal Injury Protection (PIP).

PIP is part of Michigan’s no-fault insurance system, which requires every driver to carry specific minimum coverage levels. These include medical bills, injured passengers, lost wages, survivors’ benefits, and funeral costs — regardless of who caused the accident. In many cases, PIP also helps cover health insurance deductibles, which is why Michigan’s system used to be considered the most comprehensive in the country.

Alongside PIP, the state also requires:

• $100,000 bodily injury per accident

• $50,000 bodily injury per person

• $10,000 property damage

Drivers can then add optional protections such as collision, comprehensive, uninsured motorist coverage, towing, roadside assistance, and transportation expenses — all of which can increase premiums depending on the carrier and vehicle.

How Michigan’s Car Insurance Became the Most Expensive in the U.S.

Before July 1, 2020, Michigan was the only state in America requiring unlimited PIP coverage. While this provided exceptional benefits to injured drivers, it also came with major downsides:

• Fraudulent medical claims

• Extremely high provider billing rates

• Exploding legal and administrative costs

As a result, insurance companies increased premiums to stay afloat. At the peak of the problem:

• Michigan drivers were paying 4.8% of their income toward car insurance

• Drivers nationwide were paying around 2.4%

• The average premium in Michigan surpassed $5,000 in certain zip codes

Adding to the issue, 26% of Michigan drivers were uninsured — nearly double the national average. When uninsured drivers caused accidents, insured drivers shouldered the burden through uninsured motorist claims, further driving up rates statewide.

Many out-of-state residents still believe Michigan’s rates are as extreme as they were before 2020, but the reform significantly changed the landscape.

What Changed Under Michigan’s 2020 Auto Insurance Reform?

In an effort to reduce costs while still providing some of the strongest coverage options in the country, Governor Whitmer signed major updates to Michigan’s no-fault laws. The most significant changes include:

1. Drivers Can Now Choose Their PIP Medical Coverage Level

Before 2020, unlimited PIP was mandatory. Now drivers can choose from several options ranging from unlimited to $0 (for qualifying Medicare recipients). This allows people to tailor their coverage to their health insurance and budget — lowering costs for many households.

There is also an option known as the “$250,000 PIP With Exclusions” plan. This lets drivers opt out of PIP for themselves, spouses, or resident relatives if they have qualifying health coverage (excluding Medicare/Medicaid). Anyone excluded receives zero PIP medical benefits under the auto policy, making proper planning essential.

2. Premium Reductions Were Built In

The new law introduced an 8-year rate reduction period tied specifically to PIP medical coverage levels.

3. The State Implemented a Medical Fee Schedule

For the first time, Michigan capped how much providers can bill for auto-related injuries. Charges for services not tied to Medicare pricing are now limited to 52.5–55% of what providers billed on January 1, 2019.

This dramatically reduced overbilling — a major driver of Michigan’s historically high premiums.

4. Stronger Anti-Fraud Protections

The reform created a dedicated investigation unit to monitor suspected auto-insurance fraud. It also increased penalties for violations and required preapproval of insurance rates before they are offered to consumers.

5. Restrictions on Non-Driving Rating Factors

The following factors can no longer be used to determine rates:

• Gender
• Marital status
• Homeownership
• Credit score
• Educational level
• Occupation
• Zip code

This change was designed to increase fairness and reduce discriminatory pricing practices. While disparities still exist, this reform was a major step toward more equitable insurance practices statewide.

Should You Opt Out of PIP Completely? Here’s Why Experts Say to Be Careful

When the law passed in 2020, many Michigan drivers — exhausted from paying extremely high rates — immediately opted out of PIP coverage entirely. But lawyers and medical experts strongly advise caution.

Two of the most expensive injury types in auto accidents are:

• Traumatic brain injuries
• Spinal cord injuries

Long-term care for either can exceed millions of dollars over a lifetime.

If you opt out entirely, you become responsible for:

• Copays
• Deductibles
• Out-of-network charges
• Any medical cost beyond your health insurance limits

Before choosing a low PIP level or opting out completely, it’s critical to speak with a knowledgeable Michigan insurance agent who can provide personalized guidance.

How to Save Money on Michigan Car Insurance (Even After Reform)

While the reform helped lower premiums statewide, Michigan still remains above the national average. Here are the most reliable ways to save:

1. Shop Around — Rates Vary Dramatically

Insurance companies can differ by hundreds or even thousands of dollars a year for the exact same coverage. Use comparison tools like:

• The Zebra
• MoneyGeek
• NerdWallet

Then obtain a final quote directly from the carrier or a Michigan-licensed agent.

2. Bundle Your Policies

Bundling auto with:

• Homeowners
• Renters
• Motorcycle
• Boat

…can lead to significant savings depending on the company.

3. Ask for Discounts

Most companies offer options for:

• Safe drivers
• Low mileage
• Multi-vehicle households
• Good students
• Loyalty
• Vehicle safety features

Many drivers never ask — and leave easy savings on the table.

4. Adjust Your Deductible

Moving from a $250 deductible to $1,000 can substantially reduce monthly premiums. Just make sure you’re financially comfortable covering the higher out-of-pocket amount if you file a claim.

5. Consider Pay-Per-Mile Plans

With so many people working remotely, usage-based insurance is becoming a major cost-saver. If you drive less than the national average of 13,000 miles per year, this option can dramatically lower your rate.

Conclusion

Michigan’s car insurance system has a long, complicated history — one that created some of the highest premiums in the nation. But with the 2020 auto insurance reform, meaningful changes were introduced to help reduce costs, increase fairness, and strengthen consumer protections.

However, Michigan still operates under a unique no-fault system, meaning it’s essential to understand your coverage elections and their long-term implications — especially when it comes to PIP medical benefits.

If you ever need help finding the right resources as you’re navigating life or real estate in Michigan, don’t hesitate to reach out. I’m always here to help guide you through it.