Published: January 11, 2022Last updated: October 19, 2022

Why Is Car Insurance in Michigan So Expensive?

Car insurance rates in Michigan cost 45 percent more than in the rest of the U.S.

Auto insurance costs differ by state, and Michigan is second in the nation for highest car insurance rates. That’s not typically a category you want to rank highly in. In this article, we’ll explain the many reasons why car insurance is so expensive in Michigan, from frequent personal injury lawsuits to high auto insurance requirements.

Why Is Car Insurance in Michigan So Expensive?

The high costs of car insurance in Michigan are due to the state’s insurance law, a large number of lawsuits, and a ton of auto insurance fraud, among other reasons.
Why Is Car Insurance in Michigan So Expensive


Michigan’s auto insurance average annual premium was $2,610 in 2019, which was 45 percent more than the rest of the U.S. Costs are even higher if you live in Detroit, where the average premium is $5,414 per year, about 74 percent higher than the national average. 1

Here are the details on why the average cost of auto insurance is so expensive for a Michigan driver:

State Requirements

In 1972, Michigan transitioned to a no-fault system, meaning that insurance providers had to cover accidents even if they were the insured person’s fault. While the state hoped that this transition would lower both the auto insurance rates and the number of fraudulent claims, neither happened.

Liability limit Minimum bodily injury per person Minimum bodily injury for everyone involved in the accident Minimum property damage per accident Minimum medical payments or personal injury protection (PIP) coverage per person
Michigan requirements $50,000 $100,000 $1 million within the state or

$10,000 outside of the state

Michigan will pay all necessary medical expenses and lost wages above $600,000, and $20 per day in replacement services in some cases.
National average $25,000 $50,000 $18,000 $13,000

Michigan’s bodily injury liability minimums are twice the amount of the national averages. Michigan also has the highest property damage liability minimum of any state — $1 million for in-state accidents.

The state of Michigan (the Michigan Catastrophic Claims Association, specifically) handles all medical or personal injury coverage after the first $600,000, which is by far the most generous policy in the U.S.2 Unfortunately, this extensive coverage causes auto insurance premiums to rise.

Cost of Medical Bills in Detroit

Although Michigan has a low cost of living and healthcare compared to the rest of the U.S., in Detroit in particular, medical bills are exorbitant. For example, as of 2017, Detroit medical providers charged as much as $5,300 for an MRI that would cost under $500 with Medicare or under $1,000 at other facilities.

Since MRI centers appear frequently in no-fault auto insurance lawsuits, insurance providers take these costs into account, leading to especially high auto insurance rates in the city of Detroit.

Minimum Wage

Although Michigan’s minimum wage is $9.65 per hour, higher than the federal minimum wage of $7.25, it’s not enough to cover the cost of living, even for a single person.

State Minimum wage 1 income, 1 adult 1 income, 4-person family 2 incomes, 4-person family
Michigan $9.65 85% 39% 60%

People with low incomes may pay higher rates for auto insurance, unfortunately. Learn more about the best auto insurance for low-income people.

Insurance Fraud

In 2020, auto insurance fraud made up 81 percent of all insurance coverage fraud in Michigan.3 The state of Michigan doesn’t have a watchdog group that looks out for no-fault insurance fraud, which contributes to the high number of lawsuits. Other no-fault states, like Florida, benefit from watchdog groups pursuing fraud in urban areas.

Uninsured Drivers

Uninsured drivers cause insurance costs to rise, especially if you have to add on uninsured motorist coverage, which Michigan actually doesn’t require. In Michigan, an estimated 26 percent of all drivers are uninsured, which is the second-highest percentage next to Missouri at 29 percent.4
Uninsured Drivers

Frequent Lawsuits

From 2019 to 2020, the number of personal injury and product liability filings increased by 97 percent across the U.S.5 We don’t have great data on the number of personal injury lawsuits in the entire state of Michigan, but data from 2015 and 2016 shows that, while the number of car accidents has decreased since 2003, the number of first-party and negligence lawsuits have increased by 73 percent and 26 percent, respectively.

Year 2003 2015 2016 Percentage change
Number of car crashes in Wayne County 72,227 50,458 N/A -43%
Number of negligence lawsuits 2,527 N/A 3,435 26%
Number of first-party lawsuits 1,699 N/A 6,327 73%

In Wayne County, where Detroit is located, the number of lawsuits that involved motorists and passengers quadrupled from 2004 to 2017. In 2017, these lawsuits made up over two-thirds of the state’s total lawsuits.6 Realizing that they may have to pay legal fees, auto insurance providers preemptively increase rates, passing the potential costs on to their customers.

Light BulbFYI

First-party lawsuits are lawsuits where the injured insured person sues their insurance company for not providing them with sufficient benefits under the Michigan No-Fault Act. Negligence lawsuits, on the other hand, are lawsuits people file against another person or company responsible for the harm.7


That explains why the cost of auto insurance in Michigan is so high, making it an especially expensive state for car insurance if you have a bad driving record or credit score. If you want to learn more, check out our articles on auto insurance for seniors in Michigan, the cheapest auto insurance in Michigan, or general auto insurance FAQs.


  1. No-Fault Auto Insurance Reform Bills Address Issues Identified in 2013 Paper. Citizens Research Council of Michigan. (2019, May 14).

  2. Michigan’s Auto Insurance Law Has Changed. Department of Finance and Financial Services. (2020, Jul 2).

  3. 2021 Annual Report. Department of Finance and Financial Services. (2021).

  4. One in Eight Drivers Uninsured. Insurance Research Council. (2021, Mar 22).

  5. Federal Judicial Caseload Statistics 2020. United States Courts. (2020).

  6. How aggressive lawyers, costly lawsuits, and runaway medical bills make Detroit car insurance unaffordable. Detroit Free Press. (2017, May 8).

  7. Negligence. ABA. (2016, Oct 31).