Why Is Michigan Car Insurance So Expensive? (9 Reasons Why)

If you are a responsible driver, chances are you are looking for car insurance to protect yourself from costly accidents. While car insurance rates can differ from state to state, some people have noticed that Michigan car insurance is abnormally expensive.

If you saw that Michigan car insurance rates are so expensive, you may be wondering why that is. We did some digging, and here is what we found!

Why Is Michigan Car Insurance So Expensive?

Michigan car insurance is so expensive because the state has a high rate of uninsured drivers. Additionally, Michigan laws have strict insurance requirements requiring many policies in each auto insurance plan. Michigan is also considered an accident-prone area, which means insurers are more likely to reimburse accident claims more frequently.

Do you want to find out what other factors affect the cost of Michigan car insurance? We compiled a list of factors below, so read on!

1. Insurance Requirements

One of the main reasons car insurance in Michigan is so expensive is the insurance requirements you have to get based on Michigan’s laws.

For instance, Michigan’s law dictates that you need several policies on every plan, leading to a higher cost.

Some examples of auto insurance requirements in Michigan include personal injury protection, residual bodily injury liability, and property damage.

As such, you cannot opt out of these coverages to make your insurance cheaper, as each plan will come with these policies when you get insurance in Michigan.

Notably, Michigan law also states that you need unlimited personal injury protection coverage, and you can only opt-out of this if you have separate medical coverage.

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Additionally, personal injury protection is required since Michigan is a no-fault state, meaning the insurance will cover the financial losses no matter who caused the accident.

2. Lots Of Uninsured Drivers

According to most statistics, Michigan is the second highest state for the most uninsured drivers. Therefore, roughly 26% of Michigan drivers drive without insurance coverage.

When there are a lot of drivers without car insurance, the likelihood that the insurance company has to pay more money as a result of an accident is higher.

As such, Michigan insurance companies try to mitigate their losses by charging more for car insurance.

3. Insurance Fraud

Unfortunately, a big reason Michigan car insurance costs so much are that there are high rates of insurance fraud.

It is estimated that 10% of claims for no-fault incidents in Michigan are fraudulent, so insurers avoid loss by charging higher premiums to their customers.

Additionally, Michigan has an insurance law that requires car insurance companies to reimburse claims made by clients within 30 days.

Since the processing period for claims is short, the insurers are more likely to pay for a fraudulent claim because they do not have enough time to analyze it.

4. Personal Injury Lawsuits

While insurance companies will cover financial losses regardless of who is at fault, personal injury lawsuits are prevalent in Michigan.

Since Michigan is a no-fault state, people involved in the accident can file a legal lawsuit against one another if there was a severe injury, which can poorly affect the insurance company.

5. Inflation


A common reason why car insurance is expensive in Michigan is that inflation has raised the cost.

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Normally, services like insurance will rise according to the current inflation rate, making your insurance premium more expensive.

Additionally, inflation will affect various other aspects of your car insurance, such as the repairs. Since the cost of services will rise, the cost of repairs will be more expensive, so car insurance companies will have to increase their insurance premiums.

Another example is that the cost of car parts will go up, which means that the insurance rates will get more expensive since it will cost more to buy the car parts for repairs.

6. Accident Prone Area

Even if you have never been in a car accident, the number of car accidents in your area can affect your insurance premium.

This is because you are more likely to get into an accident when you are in an accident-prone area, so insurers will try to cover potential losses by charging their customers more.

In Michigan, there were 314,376 reported crashes in 2019, which means that accidents happen frequently and increases the likelihood of you requiring an insurance claim.

7. Deductibles

Deductibles are how much you are willing to pay out of your pocket from an accident, and choosing a low deductible makes your car insurance rate higher.

When you choose a low deductible, the insurance company will try to avoid making a loss by giving you a higher premium.

8. Credit History

Normally, most car insurers, including the ones in Michigan, will base how much your premium will be by looking at your credit history.

People with poor credit histories often face more expensive rates because they are considered high-risk clients who will not pay for their insurance on time.

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The insurance company will charge them a higher insurance rate to avoid losing money on a high-risk client.

9. New Car

If you have a newer car you want to insure, you can expect your car insurance to be more expensive.

Usually, newer cars come with more expensive and modern car parts that are more expensive to replace, so car insurance companies will consider that when giving you a rate.

However, your car insurance can be a bit cheaper if your new car also comes with various safety features.

To know more, you can also read our posts on why car insurance is so expensive for teenage drivers, why Impreza insurance is so high, and why car insurance is expensive in Texas.


While car insurance prices can vary based on the company, Michigan is known for having costly car insurance.

Generally, car insurance in Michigan is expensive because of the rate of uninsured drivers, fraudulent claims, and deductibles.

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