Michigan has some of the most expensive car insurance rates in the country, and the state’s extensive car insurance requirements are part of what makes rates so high.In 2020, Michigan lawmakers came together to make major changes to state car insurance laws, with the goal of reducing insurance costs for drivers in the state.
Whether you’re a Michigan driver buying car insurance for the first time or you’re checking to make sure you have the right amount of car insurance, here’s what you need to know about auto insurance laws and requirements in the Great Lakes State.
Auto insurance requirements in Michigan
Michigan has some of the most comprehensive insurance requirements in the country. While some no-fault states have low liability requirements because drivers are expected to file a claim with their own insurance after an accident, Michigan has some of the highest liability requirements in the country along with the highest required levels of PIP coverage.
This is the minimum amount of car insurance coverage required by law in Michigan:
Bodily injury liability coverage per person: $50,000
Bodily injury liability coverage per accident: $100,000
Property damage liability coverage: $10,000
Personal injury protection (PIP): Amount varies depending on health insurance
Property protection insurance (PPI): $1 million
Liability insurance requirements in Michigan
Liability coverage is the portion of your car insurance policy that pays for damage you cause to other drivers in an at-fault accident. It’s divided into bodily injury liability, which covers the other driver’s injuries, and property damage liability, which covers damage you do to their car or other property.
Drivers in Michigan are required to have a minimum of $50,000 per person and $100,000 per accident in bodily injury liability insurance and $10,000 in property damage liability coverage You may see that written out as 50/100/10. Michigan drivers are also required to have a minimum of $1 million in PPI coverage, which covers the cost of damage to physical property resulting from a car accident.
No-fault insurance laws in Michigan
Michigan is a no-fault state, which means drivers are required to have personal injury protection (PIP), also called no-fault insurance.
No-fault insurance covers medical expenses for you and your passengers if you’re hurt in an accident. Instead of being covered by the other driver’s liability coverage, drivers in Michigan are required to make a no-fault claim with their own PIP insurance, even if the other driver was at-fault.
No-fault insurance pays for your injuries after an accident, but you may still be able to make a liability claim with the other driver’s insurance company if you are hurt in an accident they caused. This is why Michigan requires drivers to have both PIP coverage and 50/100/10 levels of liability insurance.
Proof of insurance requirements in Michigan
According to Michigan’s no-fault insurance law, Michigan drivers are required to carry proof of insurance, both when driving and when registering their car. Your proof of insurance must show that you have PIP, PPI, and third party liability coverage.
Drivers can provide proof of insurance with ID cards or electronically through their insurance company’s app on their phone. Drivers who are insured but don’t have proof of insurance can expect to be issued a ticket for no more than $50.
Penalties for driving without car insurance in Michigan
Driving without insurance is a bad idea, but some people still do it; in 2019, 25.5% of drivers in Michigan were driving without insurance.
If you choose to drive without insurance in Michigan, expect the following consequences:
Your license may be suspended if you're pulled over and you don’t have proof of insurance.
You’ll be required to pay a fine to reinstate your license.
The state may also require your insurance company to file an SR-22 form proving you have insurance before your license can be reinstated.
The state may cancel your registration and license plates until your insurance is reinstated.
That’s not counting the potential financial consequences of driving uninsured. If you’re in an accident and deemed to be at fault, you won’t have car insurance to cover the costs. That means you could be on the hook for tens of thousands of dollars in damage, and your assets, like your car, savings, or home could be at risk.
What is the new car insurance law in Michigan?
Effective July 1, 2020, the state of Michigan passed sweeping changes to car insurance requirements for drivers in the state, including:
PIP changes: Previously, drivers in Michigan were required to purchase unlimited PIP coverage. Since the law changed in 2020, drivers are now allowed to choose the level of coverage they feel is most appropriate for their needs. Additionally, insurance companies are required to lower premiums for PIP coverage through 2028. Medical providers are also required to adjust fees for services based on the state’s new fee schedule.
Rating factor changes: Car insurance companies are now prohibited from using gender, marital status, home ownership status, credit score, educational level, occupation, and ZIP codes to set rates in Michigan. This is intended to make pricing more equal, and keep insurance companies focused on how you drive rather than who you are.
Consumer protection changes: The state created a new fraud investigation unit to work specifically on insurance-related cases. The law also requires new auto insurance rates to be approved by the state and increases fines for insurance companies for some violations.
Are the state requirements enough car insurance in Michigan?
Probably not. Michigan has the most robust state minimum insurance requirements in the nation, which is part of the reason insurance rates are so high. But while the insurance requirements in Michigan are significant, drivers would still benefit from getting higher levels of liability insurance than are required by the state.
Even in a no-fault state, no matter how much (or how little) insurance you have, you can still be held financially responsible in an at-fault accident. Drivers who can afford it should choose liability levels of 100/300/100 or more, to ensure that, if they’re responsible for an accident, their insurance will be enough to cover the costs and they won’t owe anything out of pocket.
Michigan auto insurance refund
In December of 2021, Governor Gretchen Whitmer and the Michigan Catastrophic Claims Association voted to refund approximately $3 billion of surplus funds to vehicle owners in Michigan.
Drivers in Michigan were eligible for a refund of $400 per vehicle (or $80 per historic vehicle) if they had a vehicle, motorcycle or RV insured by a policy that met the state minimum insurance requirements as of October 31, 2021.
The refunds were sent out no later than May 9, 2022, so if you didn’t get a refund and believe you were eligible you should reach out to your car insurance company for more information.
Frequently asked questions
Why is insurance so expensive in Michigan?
Michigan requires drivers to have no-fault insurance, which tends to be more expensive than at-fault insurance. Michigan drivers have also historically been required to have very high PIP coverage limits, making insurance companies pay out significant claims. High rates of insurance fraud and a high percentage of uninsured drivers also contribute to the high cost of insurance in Michigan.
Do you have to have car insurance in the state of Michigan?
Yes, drivers in Michigan are required to have 50/100/10 levels of liability coverage, along with PIP coverage and PPI coverage.
Is Michigan getting rid of no-fault insurance?
No, Michigan is keeping their no-fault insurance laws, but the state did make significant changes to the laws in 2020 to help reduce insurance costs for drivers in the state. Drivers used to be required to purchase unlimited PIP coverage, but are now allowed to choose the level of PIP coverage most appropriate to their needs.
Can you sue an uninsured driver in Michigan?
Yes, although you are supposed to file a claim with your own insurance first. Typically, your PIP coverage will pay for medical expenses from the accident and your collision coverage will pay for damage to your own car, leaving your insurance company to sue the uninsured driver for money they paid out for your expenses.
