why is michigan auto insurance so expensive
Why does Michigan have some of the highest auto insurance premiums in the nation? CrainБs Detroit Business and Bridge Magazine dug into the heart of the question that affects every single driver in our state by analyzing insurance data over a 14 year span. They found that repairing people costs a whole lot more than repairing cars. Most of your auto insurance now goes to PIP, or Personal Injury Protection. Chad Livengood of CrainБs Detroit Business sat down with StatesideБs Cynthia Canty to discuss the studyБs findings, and what it means for the future of auto insurance in Michigan. You can listen to the full interview above, or read highlights below:
On the research process БWe looked at data that the insurance industry hands over every year to the National Association of Insurance Commissioners, from 2000 to 2014.
ThatБs the most recent year -- this data lags behind by four years because claims for broken cars and broken bones kind of lag behind and the payouts are not always precise year-to-year. Б On how your auto insurance is spent БWe looked at just how much of Б your premium is wrapped up in PIP versus collision or comprehensive or bodily injury. Those are the four main, large areas of every driverБs auto insurance bill. Б On what the research revealed БAnd what we found was that in 2000, PIP was 22% of all the premiums collected in Michigan on auto insurance and collision was 46% of all premiums. Fourteen years later, the entire equation has flipped. PIP is now 52% of the premiums and collision 27%. There are fewer accidents, there are fewer injured drivers, but the actual premiums collected and the payouts and losses on treating those drivers. per driver cost has tripled in a 25-year period.
From less than $25,000 to more than $75,600. Б On the cause of higher rates despite fewer injuries БThe biggest driver is that Michigan has an unlimited medical benefit for injured drivers under the no-fault auto insurance law. And itБs unlimited in two fashions: One, the total amount that you can have paid out by your insurer for your lifetime medical costs, and that ranges from the broken bone to someone who is paralyzed and bedridden. those are the most catastrophic injuries. But then, the person whoБs going through hospital for whiplash or a back injury, and then goes to a post-hospitalization clinic, an outpatient clinic. For those providers there is no limit on what they can charge.
It is simply what the insurance company will pay. (Subscribe to the Stateside podcast on, or with this ) To calculate which states had the most expensive insurance, Insure. com commissioned Quadrant Information Services. The firm assessed auto insurance rates from six large carriers Allstate, Farmers, GEICO, Nationwide, Progressive and State Farm for 10 zip codes in each state. The standardized person the study used was a single, 40-year-old male who commuted 12 miles per day and wanted $100,000 in injury liability for one person, $300,000 for all injuries and $50,000 for property damage, with a $500 deductible. The person had good credit and a clean driving record. To get the average rates, the study looked at the cheapest-to-insure 2017 model-year versions of the 20 best-selling vehicles nationally.
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