Most expensive states for car insurance
#1 Michigan
Michigan has dominated the top spot for expensive states by capturing the No. 1 spot five of the eight years Insure.com has conducted the study. Beyond the last four years, Michigan was also pronounced the most expensive in 2011 and placed second in 2010 and 2013. The lowest it has come in was third in 2012. This year Michigan’s average annual premium is $2,394 --
82 percent higher than the national average of $1,318.
Michigan’s unique no-fault car insurance system is the culprit for the high annual car insurance rates. Not unlike other no-fault states, Michigan r
equires car owners to buy personal injury protection (PIP) coverage that pays for the medical expenses of the policyholder and household residents if they are injured in an auto accident. This coverage also extends to passengers who don’t have their own PIP insurance.
Where Michigan’s coverage becomes unusual are the limits.
Other no-fault states place a limit on the PIP amount; Michigan’s PIP policy instead
guarantees unlimited lifetime medical benefits to those injured in an auto accident. Car insurance companies pay up to $555,000, and then the nonprofit Michigan Catastrophic Claim Association (MCCA) picks up medical expenses exceeding that limit. Michigan drivers help fund the MCCA by paying an annual assessment fee. Currently it is at $170 per vehicle.
Insurance fraud also helps push the auto insurance premiums higher. The Michigan Insurance Fraud Awareness Coalition estimates that around 10 percent of all no-fault claims are fraudulent, costing insurance companies about $150 million. It concludes that this crime costs Michigan motorists $200 to $300 each year in higher car insurance costs.
The high cost of auto insurance in Michigan results in many drivers unable to afford a policy but who continue to drive. Michigan is
estimated to have 21 percent of drivers on the road operating without car insurance. A large number of uninsured motorists prods car insurance rates higher because there are fewer insured drivers paying premiums to help offset the risks taken on by the car insurance companies.
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