Michigan lawmakers passed auto insurance reform legislation in 2019 that state Gov. Gretchen Whitmer has called “truly historic.” The law took effect in July 2020 and is designed to lower car insurance prices by introducing Personal Injury Protection (PIP) medical coverage choices, a medical fee schedule, and limits on certain non‑driving rating factors.
Yes, you heard correctly.
We ? have ? a ? deal ? pic.twitter.com/nJ1VvJQ1ov— Governor Gretchen Whitmer (@GovWhitmer) May 24, 2019
This reform had been a long time coming. In 2025, Michigan still ranks among the top 3–5 most expensive states for auto insurance, with average full‑coverage premiums in the mid‑$3,000s and Detroit prices substantially higher (The Zebra; Bankrate; NerdWallet). Early post‑2020 PIP savings for many drivers were later pressured by nationwide claims inflation and Michigan‑specific legal and assessment dynamics, including the Michigan Supreme Court’s Andary decision and changes to the MCCA assessment. As a result, affordability remains a challenge and some drivers continue to forego coverage, even after initial relief. Lawmakers had struggled for years to find a solution as rates steadily rose, and they continue to monitor outcomes of the reform (State of Michigan DIFS).
This is an extreme case, to be sure, as Michigan’s unique auto insurance laws — including an optional unlimited lifetime PIP medical benefit — have been major drivers behind its high rates. But other states are feeling similar pains of their own. Issues with no-fault insurance and rate-setting practices have arisen nationwide in recent years, and Michigan’s experience may inform future regulatory changes elsewhere (Insurance Information Institute; DIFS).
The Cost of Auto Insurance in Michigan
As of 2025, recent market benchmarks place Michigan’s statewide average annual premium for full coverage roughly in the mid‑$3,000s, with minimum‑coverage averages around the low‑$1,000s, according to Bankrate, NerdWallet, and The Zebra.
At these price levels, car insurance can exceed the “affordable” benchmark in many ZIP codes — the University of Michigan has highlighted how premiums consume a significant share of income in many communities — and by the U.S. Treasury’s standard, insurance exceeding 2% of a ZIP code’s median income is deemed “unaffordable.”
Things are even worse in the densely populated, often lower-income areas of large cities. Drivers in Detroit, for example, can pay well over $5,000 per year for full coverage — far above the statewide average — according to The Zebra.
Michigan’s average full‑coverage premium sits in the mid‑$3,000s—among the top 3–5 most expensive states nationally—and premiums in Detroit and other high‑risk ZIP codes run even higher (source).
Rates are so high that many people either opt not to drive — which can create a serious barrier to job opportunities and basic resources — or simply drive without insurance. Michigan’s estimated uninsured motorist rate was about 19.6% in 2022 (roughly one in five drivers), down from 25.5% in 2019 but still above the 2022 national average of 14.0% (Insurance Information Institute; Insurance Research Council). The risks remain significant for uninsured drivers.
That’s problematic for a few reasons. First, because Michigan is a no-fault state (see DIFS overview), your own insurer must pay for your injuries and damages after a collision. Drivers without coverage must therefore foot their own medical bills and repairs after an accident. If they can’t do so, and don’t have health insurance to fall back on, those costs might end up being absorbed by the state through Medicare or Medicaid or go unpaid.
In addition, those caught driving without insurance could potentially face a fine between $200 and $500 and up to a year in prison, adding insult to injury for drivers that couldn’t afford car insurance in the first place but must drive as a necessity of their day-to-day life.
How Michigan’s Auto Insurance Rates Got So High
Car insurance rates are based on many different factors, but when it comes to Michigan’s sky-high premiums, one factor has loomed above the rest — PIP coverage and the historically unlimited medical benefit many drivers chose before reform.
Michigan is one of no-fault state that require all drivers to purchase PIP (personal injury protection), and since July 2020 drivers choose among PIP medical limits: Unlimited, $500,000, $250,000, or a $50,000 option for certain Medicaid enrollees; qualifying Medicare beneficiaries may opt out (DIFS).
Here’s the kicker, though: Most PIP jurisdictions set fixed medical caps (commonly $8,000–$50,000), while Michigan uniquely still offers an Unlimited lifetime medical option alongside capped choices (overview).
That means your own insurance company must cover all medical costs stemming from an accident — even for a catastrophic injury that requires lifetime medical care or rehabilitation. In other words: A serious car accident in your 20s could have your auto insurer paying long-term care costs into your 80s or 90s.
While unlimited PIP is an invaluable safety net (“the gold standard in terms of medical care for drivers,” as Michigan Radio called it), it also puts a heavy financial burden on insurance companies. Post‑reform, a medical fee schedule curbed some PIP claim costs, but the 2023 Andary ruling increased liabilities for pre‑reform injuries, and the MCCA assessment applies to policies with Unlimited PIP (with deficit recoupments possible across policies in some years). When insurers have to pay more for claims, they charge more in premiums to make up for it.
PIP choices (including Michigan’s unique Unlimited option), medical fee schedule dynamics and MCCA assessments, high injury-severity costs, uninsured-motorist exposure, and litigation/fraud pressures all contribute to Michigan’s expensive auto insurance.
Of course, there’s never just one side to an insurance story. Though PIP is the most glaring reason for Michigan’s high rates, it’s not the only culprit.
As we mentioned above, the high cost of auto insurance in Michigan historically pushed many drivers to go without coverage. Encouragingly, the uninsured rate fell from 25.5% (2019) to about 19.6% (2022), but it still exceeds the national average (III).
That price hike is compounded still further for low-income drivers. Going uninsured for a time (whether by choice or because someone simply can’t afford it) lands drivers in a higher “risk class,” so they’ll end up paying a lot more when they do reapply for coverage.
Michigan’s unlimited PIP law and broader no‑fault framework have also been associated with above-average legal frictions. Although no-fault laws were originally intended to reduce time and money spent in court — and actually lower insurance costs as a result — attorney involvement remains high nationally, and the Andary decision revived disputes on legacy catastrophic claims, adding further cost pressures.
“People are hiring personal injury attorneys to fight for [them] … to get the maximum amount of benefits for their medical claims, long-term care, and for lost wages,” Chad Livengood of Crain’s Detroit Business told Minnesota Radio. He claimed about one third of all civil litigation cases in Michigan are auto insurance-related.
Fraud also remains a concern. State prosecutors continue to pursue staged crashes, inflated medical billing, and premium evasion through the Attorney General’s Auto Insurance Fraud Unit, and the National Insurance Crime Bureau reports rising “questionable claims” through 2023 nationwide (NICB), keeping upward pressure on premiums.
Michigan’s Plan to Lower Auto Insurance Rates
After years of indecision (and a 2018 gubernatorial race where insurance prices were a top issue for voters), Michigan lawmakers reached an agreement in 2019 about how to move forward with auto insurance reform. The final legislation included key components from earlier, Republican-backed bills as well as the Democratic party’s reform platform.
Before passage in 2019, lawmakers in Michigan struggled to settle on reform legislation because they were approaching it from two different angles. The Republican-led legislature sought to reduce prices by letting drivers choose lower levels of PIP coverage or opt out of it entirely. Gov. Whitmer and the Democratic party preferred a plan that would require insurers to reduce costs across the board and regulate rate-setting practices more strictly. The end product was a compromise between both perspectives.
Effective July 1, 2020, the new law eliminated Michigan’s mandatory unlimited PIP requirement by replacing it with a tiered PIP system. Drivers can still choose Unlimited coverage, but they also have $500,000, $250,000, or a special $50,000 option (for certain Medicaid enrollees); qualifying Medicare beneficiaries may opt out of PIP medical entirely. The law requires statewide average reductions on the PIP medical portion of premiums of at least 10% (Unlimited), 20% ($500k), 35% ($250k), and 45% ($50k) through July 1, 2028 (DIFS).
In addition, Michigan insurers may no longer use several non-driving factors to set rates. Variables like gender, marital status, credit score, education, occupation, home ownership, and postal zone/ZIP code are prohibited in rating for private passenger auto, shifting consideration more heavily to driving record and other permitted factors (MCL 500.2111).
Michigan’s new regulations require statewide average PIP medical premium reductions of 10% (Unlimited), 20% ($500k), 35% ($250k), and 45% ($50k) through July 1, 2028; ban several non-driving factors in rate-setting; and implement a medical fee schedule to rein in accident-related medical costs (DIFS).
The other big change was a medical fee schedule for providers (phased in starting July 2021) and a 56‑hour cap on family-provided attendant care. The fee schedule limits what medical providers can bill auto insurers for accident-related services and was intended to reduce costs for drivers — an approach the Insurance Journal detailed when the law passed. In August 2023, however, the Michigan Supreme Court held that the fee schedule and attendant care limits do not apply retroactively to people injured before reform (Andary v. USAA).
So, how much will Michiganders actually save on their premiums? It depends. Many drivers who selected lower PIP limits saw meaningful reductions in the PIP portion of their premiums, but overall auto rates in Michigan rose sharply in 2023–2025 in line with national loss trends and post‑Andary/MCCA dynamics. Current statewide averages for full coverage sit in the mid‑$3,000s, with minimum coverage in the low‑$1,000s (Bankrate; The Zebra; NerdWallet).
In other words: Michigan’s auto insurance reform delivered early relief in the PIP line item, but many consumers later experienced higher total premiums. Drivers who retained Unlimited PIP tend to face higher costs and the full MCCA assessment, while those choosing lower limits often still pay less than pre‑reform baselines. Watching the annual MCCA assessment and future legislative adjustments will be key.
Michigan Isn’t the Only State Feeling Insurance Pains
Though Michigan’s reform affects its residents most directly, other states are watching closely. No-fault/PIP remains in a core group of jurisdictions, and Michigan’s post‑2020 experience may shape future policy debates elsewhere (III overview).
For example, Michigan isn’t the only state that has experienced PIP-related fallout since no-fault laws were originally instituted. Of the states that adopted no-fault decades ago, some later repealed or modified their systems (Insurance Information Institute).
As Pew Research put it in 2016: “By the early 1990s, insurance premiums had increased, drivers were suing their insurers over coverage benefits, and fraud had become rampant. Some states found themselves in the position Michigan is in now. They altered their no-fault laws or dropped them.”
The outcry has been loudest in Florida, New Jersey, and New York, as insurance analyst Craig Casazza wrote for Forbes. Like Michigan, these states have experienced higher auto insurance rates thanks to their PIP laws. In 2025 comparisons, Michigan typically ranks among the top 3–5 most expensive states, with large cities such as Detroit priced far above statewide averages (The Zebra). On uninsured motorists, Michigan stood at 19.6% in 2022 versus 14.0% nationally (III).
Still, many drivers reject the idea of a cold-turkey break from PIP insurance. For those that have benefited from the protection PIP offers — especially in Michigan, where coverage can be Unlimited — it’s incredibly valuable, and more easily accessed than traditional liability insurance. PIP can also offer post-accident fallbacks like disability insurance and reimbursement for lost wages, which not all health care plans do.
No-fault remains in place in core jurisdictions, and many states — notably Michigan, California, and Massachusetts — have restricted non-driving factors like gender, marital status, credit, education, and occupation in rate-setting (III; California DOI; MCL 500.2111).
Then there’s the question of non-driving rating factors, on which Michigan Democrats centered their reform campaign.
To give a little background: Auto insurance companies use a wide variety of driver data to set rates, from driving records to address, gender, credit score, marital status, education level, and more. Insurers consider these factors as they’ve been shown to correlate to “risk level” in some way or another.
For example, a 2007 study from the U.S. Federal Trade Commission found that credit scores correlate to both the number and cost of claims filed by customers, and are therefore “effective predictors of risk under automobile policies.” Similar results have surfaced around factors like ZIP code, gender, and marital status.
However, Michigan Democrats, among others, have pointed to the possible discrimination that can stem from such rating practices. Gender is an obvious one; it seems unfair to be rated on a factor that’s totally out of your control, which is why a number of states have banned gender-based insurance pricing, as the Washington Post reported.
But other pricing considerations are more nuanced. Demographic factors like education level, address, and credit score might correlate with driver risk, and thus potential cost to insurers — however, it’s difficult to quantify how much those factors are influenced by outside socioeconomic factors, and whether using them to set rates put an unfair pricing burden on lower-income drivers.
That’s why Michigan and other states, like Maryland, have vied for ratings systems that depend more heavily on residents’ driving records to set rates, as the Post reported last year. More recently, Colorado adopted rules requiring testing and governance to prevent unfair discrimination when insurers use external consumer data and algorithms in personal lines (Colorado DOI).
Auto Insurance Reform In Michigan Could Pave the Way for Others
Michigan’s auto insurance industry was more broken than most, but it’s not the only state where drivers are looking for new and better options. With auto insurance rates elevated nationwide and lawmakers questioning rating practices, Michigan’s post‑2020 outcomes — early premium relief, a later run‑up in overall rates, a decline in uninsured motorists, and ongoing debates about catastrophic care — will likely inform future reforms elsewhere (DIFS; III).
Of course, change doesn’t always have to happen on an institutional level. Some insurance companies have already begun to shake things up by taking business online and harnessing new technology to offer cheaper rates. These “digital insurers” increasingly use telematics/UBI and connected-car data to price more precisely, often rewarding safer or lower-mileage drivers (NAIC).
But digital insurers are still few and far between. And beyond that, insurance as a whole is a heavily regulated industry. Things like PIP laws, fee schedules for medical coverage, and rating practices won’t change across the board until lawmakers can agree on the right course of action — and regulators are increasingly setting expectations for fairness and transparency in AI and telematics programs (Colorado DOI).
If Michigan’s new legislation has a positive and lasting effect on auto insurance prices, it could set an example for other states currently contending with similar PIP and rate-setting issues.
