Last Updated on December 7, 2025

Michigan is consistently one of the most expensive states in America for auto insurance. For years, Michigan drivers have paid some of the highest premiums in the nation — even after major reform efforts.

Why is car insurance so expensive in Michigan? Why do Michigan drivers pay far more than drivers in most states? Below, we break down why Michigan premiums remain high — and what you can do to save money.

Key Takeaways

• Michigan drivers pay some of the highest auto insurance premiums due to no-fault rules, PIP requirements, and high claim costs.
• Michigan historically required unlimited lifetime PIP medical benefits, the only state to do so.
• High fraud rates and a large number of uninsured drivers continue to elevate statewide premiums.
• Drivers can save money by adjusting PIP levels, bundling policies, and comparing insurers regularly.

Michigan Continues to Rank Among the Most Expensive States for Car Insurance

Michigan has long been near the top of the list of the most expensive states for auto insurance. Although reforms passed in 2019 helped lower rates for many drivers, Michigan still remains well above the national average.

Today, the average full-coverage premium in Michigan is often over $2,500 per year, while the U.S. national average is closer to $1,700 per year. Even the cheapest Michigan ZIP codes still trend higher than comparable areas in neighboring states.

Michigan’s rates remain elevated for several unique reasons built into the state’s insurance structure.

Top Reasons Why Michigan Car Insurance Is So Expensive

Michigan insurance companies aren’t charging more simply because they can — several structural, legal, and demographic factors make Michigan more expensive to insure vehicles than most U.S. states.

Here are the biggest contributors:

1) Michigan Is a No-Fault Insurance State

Michigan uses a no-fault auto insurance system. Under no-fault rules, each driver’s insurance pays for their own medical bills after an accident, regardless of fault.

No-fault systems were originally intended to reduce lawsuits and lower costs, but in practice, many no-fault states — including Michigan — developed significantly higher claim costs over time.

Michigan is one of just a handful of states still using a full no-fault system, and it plays a major role in keeping premiums high.

2) Personal Injury Protection (PIP) Coverage Is Required

Michigan drivers must purchase Personal Injury Protection (PIP) coverage. PIP covers medical bills for you and household members injured in an accident, regardless of who caused the crash.

PIP is mandatory in Michigan because of the no-fault structure. While recent reforms now allow drivers to choose different levels of PIP coverage, many drivers still carry higher PIP limits — and higher limits drive higher premiums.

3) Michigan’s PIP Requirements Are Unique (and Historically Expensive)

Michigan was long known for having the nation’s most generous PIP system. For decades, Michigan required unlimited lifetime medical benefits for accident victims. No other state required unlimited lifetime PIP by default.

This led to enormous claim costs.

Today, drivers can choose from multiple PIP levels, including:

• Unlimited medical coverage
• $500,000
• $250,000
• $50,000 (Medicaid-eligible drivers only)
• PIP opt-out (only under specific criteria)

Even with these new options, many drivers still carry high PIP levels, and medical claim severity in Michigan remains among the highest in the country.

Michigan’s system also includes the Michigan Catastrophic Claims Association (MCCA), which pays medical costs above a certain threshold. Every insured driver pays the annual MCCA fee, which can exceed $100 per vehicle depending on the PIP level chosen.

4) Fraud and Claims Abuse Have Historically Been High

Michigan has struggled with fraudulent or inflated no-fault claims since long before the 2019 reforms. Medical billing abuse, staged accidents, and excessive treatment costs were major contributors to Michigan’s high premiums for decades.

While recent reforms reduced some abuse, fraud-related losses still remain higher in Michigan than in most states. These extra costs are passed on to policyholders.

5) High Rates of Uninsured Drivers

Michigan is consistently among the states with the highest percentage of uninsured drivers. Estimates often show that 1 in 4 drivers on Michigan roads are uninsured — significantly above the national average.

When uninsured drivers cause accidents, insured drivers ultimately absorb more of the cost through higher premiums.

What About Michigan’s 2019 Auto Insurance Reform?

Michigan’s sweeping 2019 auto insurance reform law was designed to reduce rates by:

• Allowing drivers to choose lower PIP medical limits
• Creating new fee schedules for medical providers
• Reducing MCCA reliance
• Curbing fraud and excessive billing

While many drivers did see savings — especially those choosing lower PIP limits — rates remain high overall. Michigan’s unique no-fault structure, medical claim severity, and high uninsured-driver population still push premiums upward.

How Michigan Drivers Can Lower Their Auto Insurance Costs

Even though Michigan is expensive, drivers can still save by:

• Reducing PIP limits if eligible and medically appropriate
• Increasing deductibles
• Bundling auto + home insurance
• Comparing rates among major and regional insurers
• Maintaining good credit
• Asking about low-mileage, good-driver, and telematics discounts

Shopping around is especially important in Michigan, where premiums vary widely by ZIP code and insurer.

FAQs

Conclusion: Compare Rates to Save Money on Michigan Car Insurance

Michigan drivers continue to face some of the highest auto insurance rates in the country. No-fault regulations, PIP requirements, historic fraud issues, high uninsured-driver rates, and medical claim costs all contribute to elevated premiums.

If you’re a Michigan driver looking to save money, compare quotes from multiple insurers. You can review our list of the top 25 auto insurance companies in the United States or explore local Michigan insurers to find lower rates and better coverage options.