Auto Insurance in Michigan has Significantly

 Auto Insurance in Michigan has Significantly

The affordability of personal auto insurance in Michigan has significantly improved following the 2019 insurance reform, according to a report by the Insurance Research Council (IRC).

The study titled "Personal Auto Insurance Affordability in Michigan" found that auto insurance expenses accounted for 1.9% of the median household income in Michigan in 2022, down half a percent from its peak before the reform. Nonetheless, Michigan's insurance expenses remain higher than the national average and 44 other states.

 

 

Key findings from the report include:

• Before the reform, Michigan drivers were required to purchase unlimited personal injury protection (PIP), which led to very high auto injury claim costs and was a major driver of expenses.
• In 2022, Michigan households spent $1,319 to insure each vehicle, nearly 20% above the national average. However, since the reform, Michigan's expenses have decreased, contrasting with the rising costs in almost all other states. From 2019 to 2022, the average auto insurance expense in Michigan dropped by 12%, compared to a 5% increase nationwide.
• The rate of uninsured drivers in Michigan, one of the highest in the country, dropped by 5% between 2020 and 2022.

According to Dale Porfilio, president of IRC, improving the affordability of auto insurance in Michigan must start with addressing the primary cost drivers: the severity of injury claims and litigation. The average amount paid per claim in Michigan is significantly higher than the national average and other states.

Porfilio also noted that the 2022 data does not fully reflect national affordability challenges, such as economic inflation, higher replacement costs, legal system abuse, and worsening driving behaviors. However, several key indicators show the positive impact of Michigan policymakers' efforts to improve insurance affordability in their state.