With annual premiums averaging $2,541, Michigan is the most expensive state for car insurance. Several factors combine to make auto insurance so expensive in this state. A fairly high population of uninsured drivers, harsh winter weather and high rate of auto theft all contribute to the cost of insurance in the state. Specialized insurance laws also contribute to the price of insurance.

Why is Michigan Car Insurance so Expensive?

Although several factors are examined while assessing the price of coverage in an area, one of the biggest is the number of uninsured motorists in a state. People who drive without insurance cause premiums to raise for those who do have coverage by causing accidents that must be paid in full by a single insurance company. The company, unable to recover the cost of a claim, must absorb the full cost of the repairs. In order to compensate, the insurance company raises premiums across the area. Michigan has a fairly high percentage of uninsured drivers, approximately 17 percent.

Theft is also a major concern in Michigan, which rates 5th in the nation for auto theft. Most theft is concentrated in Detroit, but thefts do occur throughout the state. Most vehicles stolen in the state are 90s model American-made cars like Chevrolet or Ford.

Winter weather is another major contributor to claims. Ice and snow are major contributors to auto collisions, especially single-car accidents and multiple-car pileups. Areas with more temperate weather file fewer claims for accidents in winter months, but cold northern areas often experience an influx of claims in the winter. Collisions with deer are also especially common throughout rural Michigan.

Unique Insurance in Michigan

Michigan is the only state that offers truly no-fault auto insurance. In other no-fault states, a person’s insurance is responsible to cover his injuries after an auto accident, regardless of who caused the accident. This differs from tort states, where drivers are able to sue for medical expenses or collect them from another driver’s insurance.

Michigan handles damages this way. Whenever a driver is involved in an accident, his insurance pays for his damage and the other person’s damage pays for that individual’s damage. There are also three types of collision coverage offered in the state:

— Regular collision

An insured has a deductible. After he pays his deductible, the insurance company covers the rest of the damage. If he’s not at fault for an accident, he can file a mini-tort claim against the other party in order to have his deductible reimbursed up to $500, but he cannot receive any more money for a claim.

— Limited collision

The insured has no deductible. This type of coverage only pays for accidents where the insured is not at fault. If he caused the accident, such as by rear-ending another car or hitting a fixed object, he cannot pursue his insurance company for damages.

— Broadform collision

The insured’s deductible is waived if he is not at fault. If an insured has broadform collision, he only pays his deductible if he causes an accident. If he is not at fault, his deductible is waived. This coverage is the most common but also the most expensive option in the state.

There are also two different kinds of liability insurance offered in Michigan. One, limited property damage liability coverage, pays for any mini-tort claims filed against an individual’s policy. The other, property protection insurance, pays for damage caused to non-vehicle property and government vehicles.

Michigan is also unique in that it provides lifetime benefits for certain types of medical claims filed against an individual’s policy. A person who suffers a debilitating injury may receive an unlimited amount from his insurance company to cover medical expenses. No other state offers injury protection this thorough, which is another reason why Michigan policies are so much more expensive than other states.

Michigan Car Insurance Requirements

All drivers in Michigan must carry property protection insurance, which always has a limit of $1 million. They must also carry personal injury protection coverage and residual liability insurance for injuries. This bodily injury coverage primarily pays for defense costs and medical expenses in certain specific situations; the limit is $20,000 per person and $40,000 per accident.

Drivers can also choose whether to buy regular, limited or broadform collision coverage as well as comprehensive coverage. Drivers can also purchase the limited property damage protection coverage, otherwise known as mini-tort coverage, to cover the cost of another driver’s deductible if a mini-tort claim is ever filed against the policy. Michigan drivers can also purchase rental reimbursement and towing coverage in this state.

Because insurance in Michigan is handled differently from other states, it’s a good idea to discuss any questions that you may have about coverage with a licensed agent in the area. This will ensure that you purchase the best policy to suit your needs. Car insurance in Michigan may be expensive, but it does have unique benefits beyond what other states provide.