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Why Is Michigan Car Insurance Most Expensive?

As recently discussed at ABC News:

When it comes to car insurance rates, Michigan, Louisiana, Kentucky, West Virginia and Mississippi are at the top of the heap for the amount paid compared to residents’ incomes.

 

According to data compiled by CarInsuranceQuotes.com, those are the five most expensive states for car insurance, with Michigan in the number one position. On average, the typical Michigan household pays a hefty 8 percent of its annual income for car insurance. By contrast, the typical Massachusetts household dedicates a mere 1.43 percent of its annual income to car insurance. North Carolina (1.6 percent), Hawaii (1.6 percent), Alaska (1.75 percent) and Oregon (1.95 percent) are among the most affordable states.

By why is car insurance so expensive in Michigan? Let’s take a look at some of the factors.

Who is to blame for Michigan Being #1 for Expensive Car Insurance?

Michigan car insurance rates have been on the rise for a long time. I wrote about the rising Michigan car insurance issue back in 2009. Unfortunately, many of the same factors that were causing Michigan car insurance rates to rise back then are still operating today.

Some of the discussion on that post is very telling in terms of the varying perceptions of Michigan residents about the costs of car insurance. For example, one commenter writes:

It is a rip off, these insurance companies are getting rich! At the expense of the middle class and poor! I am with AAA and because of laid off, poor credit and where I live I have to pay 2200 a year for a 2005 Taurus! No tickets since 1987, and that was a prohibited Left turn! I did have a accident in 2008 on a icy overpass and they totaled my truck! After I dropped the insurance from it it didn’t drop! I am still paying the same for the car and truck, and only have the car! Is there something I am missing here!

And on the same post, another commenter says:

Economics must not be a requirement for a law degree. This has nothing to do with “the greedy insurance companies” and everything to do with forcing people to cover those that don’t have insurance. We get to pay for our own insurance plus insurance for everybody on the road that won’t pay for their own.
The simple fix to this is: if someone is pulled over and doesn’t have insurance, take their car.
In an earlier article this author stated something to the affect that $143.50 is not that much money to cover the cost of lifetime medical for an accident victim. I don’t know what his income is, but that is A LOT of extra money we are forced to pay for someone else’s negligence!

Clearly, some very different views. But let’s look at a couple facts.

First, it’s important to understand that most states require their motorists to have some level of auto insurance. It is true that one of the factors making Michigan car insurance more expensive is that Michigan is the only state that guarantees unlimited personal injury protection, or PIP.

PIP insurance provides coverage for medical costs arising out of a car accident, regardless of who is at fault.

Some people may wonder Whether this policy is good or bad. And of course whether it is viewed as good or bad depends on a certain extent to one’s perspective.

Of course, if you’ve been seriously injured in a car accident and require treatment and rehabilitation for the rest of your life, you would understand that such coverage is essential to prevent financial ruin.

And of course, if you aren’t in need of lifetime medical care and rehabilitation from a car accident, you might believe that the system unfairly raises your insurance premiums.

But the truth is, several independent studies have concluded that Michigan auto insurance companies have been gouging consumer while hoarding record-breaking profits for years.

It’s also worth noting that Michigan is one of the only states permits the insurance industry to charge different rates and higher insurance premiums for people with bad credit, low-status jobs and limited education!

Finally, consider this: In 2011, 551,397 people were in 284,049 crashes in the state of Michigan.

Many of these 551,397 people will need medical treatment and rehabilitation for their injuries. Eliminating or reducing personal injury protection benefits will merely pass the cost onto our society in some other form, whether that be higher taxes or perhaps higher health insurance rates.

But enough of what I think. What do you think? What do you believe are the causes of Michigan’s high cost of car insurance? I invite you to comment below.

This entry was tagged Tags: "Michigan car insurance", No-Fault Insurance Blog
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