The Numbers Are Not an Exaggeration
Michigan drivers pay more for auto insurance than drivers in any other state. The average Michigan premium is roughly double the national average, and in Detroit, the average cost has historically exceeded $5,000 per year. There are real reasons for this — and those reasons directly affect what happens to you if you are in an accident.
Why Michigan Is So Expensive
Three factors drive Michigan's insurance costs. First, until 2020, Michigan was the only state that required unlimited lifetime PIP medical benefits. That meant your insurance had to cover every medical bill from an auto accident for the rest of your life — no cap, no limit. Insurance companies priced this accordingly. Second, Michigan's no-fault system means your own insurance pays your medical bills regardless of who caused the crash, which eliminates the insurer's ability to subrogate against the at-fault party's carrier for PIP benefits. Third, fraud — Michigan has historically had significant problems with staged accidents, fraudulent medical billing, and abuse of the no-fault system, which drove up costs for everyone.
The 2019 Reform Changed the Game
The reform that took effect July 2020 under MCL § 500.3107c gave Michigan drivers a choice of PIP coverage levels for the first time: unlimited, $500,000, $250,000, $50,000 (with qualifying health insurance), or opt-out (Medicare only). The theory was that choice would lower premiums. For many drivers, it did. But the savings came with a trade-off — if you chose a lower tier and then suffer a catastrophic injury requiring $1 million in care, you face a devastating gap between your coverage and your actual costs.
How Your Coverage Election Affects Your Claim
Your PIP election is not just an insurance decision — it is a legal strategy decision that affects your financial recovery after an accident. If you have unlimited PIP, your medical expenses are fully covered regardless of fault, and your third-party claim focuses entirely on pain, suffering, and economic losses beyond PIP. If you chose $250,000 PIP and your medical costs hit $400,000, you have a $150,000 gap that either comes out of your pocket or must be recovered from the at-fault driver's liability coverage — which may or may not have enough limits. Koussan Law advises every client on how their PIP election impacts their specific case.
Uninsured and Underinsured Motorists in Michigan
High insurance costs drive a significant number of Michigan drivers to go without insurance entirely. Estimates suggest that 20-25% of Michigan drivers are uninsured, and the rate is higher in Detroit. If an uninsured driver hits you, your options for recovery depend on whether you purchased uninsured/underinsured motorist (UM/UIM) coverage on your own policy. If you did not, your recovery is limited to PIP benefits and a direct lawsuit against a driver who likely has no assets. This is why Koussan Law recommends every Michigan driver carry UM/UIM coverage — it protects you when the other driver cannot.
Understanding your Michigan auto insurance is not optional — it is essential to protecting yourself. If you have been in an accident and need help navigating insurance coverage, call Koussan Law at (313) 800-0000.
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