Report: Michigan Auto Insurance Rates Still Highest in the Nation

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Despite legislative reforms meant to lower the cost of auto insurance in Michigan, the state still has the nation’s highest premiums. // Stock photo

Michigan still has the highest auto insurance rates in the country, three years after the state’s auto insurance reforms — intended to lower rates — went into effect, according to the Mid-Year Auto Trends Report by Insurify, a Massachusetts-based virtual insurance agent.

This is the third consecutive year that Michigan has appeared in the No. 1 spot in Insurify’s report. Drivers in the state pay $2,766 annually for car insurance on average — 66 percent higher than the national rate. That’s 4.4 percent of annual household income.

The national average annual cost of a car insurance policy increased $240 to $1,668 in the first six months of 2023, up from $1,428 in 2022. Prices are expected to increase another 4 percent before the end of the year, according to the report, which attributes these increases to insurers experiencing high losses as a result of growing auto repair prices and the effects of climate change.

In the Great Lake State, auto insurance premiums have increased 31 percent since 2022, despite the reforms, and may continue to increase through the end of the year, as the Michigan Catastrophic Claims Association (MCCA), which manages the state’s catastrophic claims fund, increased fees for drivers on July 1, 2023.

Other factors leading to Michigan’s high auto insurance rates include: “High state coverage requirements, severe winter weather, and a relatively high percentage of uninsured drivers,” the report states.

“The average monthly insurance rate in Michigan is $487, exceeding the national average by more than $200,” according to the report.

On May 30, 2019, Gov. Gretchen Whitmer signed bipartisan no-fault auto insurance reform legislation intended to provide insurance coverage options and lower rates for Michigan drivers. The changes applied to policies issued or renewed after July 1, 2020.

“Vehicle repair and maintenance costs have outpaced inflation and show no signs of slowing, leading insurers to increase auto insurance prices to keep up with the cost of higher claim payouts,” says Allie Feakins, senior vice president of insurance at Insurify addressing the overall findings.

The report examines auto insurance price trends using Insurify’s own data of more than 79 million car insurance quotes, sourced directly from partnering insurance companies. It also reveals:

  • Drivers are dropping coverage to keep car insurance costs affordable. The percentage of car insurance shoppers considering buying full-coverage car insurance fell more than 50 percent in 2023, compared to 2022.
  • Car insurance prices have climbed the highest in New Mexico, Nevada, and New Jersey, with an average 34 percent increase in costs within the last six months.
  • Major insurers are pulling out of Florida and California, citing devastating hurricanes and wildfires that have led to heightened catastrophe risk and a high number of expensive claims.

“The frequency and severity of natural disasters have led to some geographical areas experiencing different types of weather events from what they’ve seen before,” says Betsy Stella, vice president of carrier management and operations at Insurify. “More vehicles are being caught and destroyed in fires and floods, and ice is sticking around longer, increasing the likelihood of collisions. This has led to auto insurers paying a higher number of — and a higher price for — customer claims.”

Claims are also more difficult and expensive to fulfill, as the price of auto parts continues to surge, with the consumer price index for motor vehicle maintenance and repair showing double-digit increases every month since September 2022.

Given the high cost of auto repair prices and impact of climate change, insurers have experienced record-breaking losses over the last year. The property and casualty insurance sector posted a net combined ratio of 111.8 percent in 2022, and drivers will continue to see higher prices as they renew coverage.

To review the full report, visit here.