Michigan – In 2019, Michigan changed its car insurance laws, which is believed to be a major reason for the United States’ biggest decrease in drivers without insurance.
Recently, the Michigan Department of Insurance and Financial Services (DIFS) revealed findings from the Insurance Research Council. These findings indicate a drop of over 6% in the number of Michigan drivers without insurance from 2020 to 2022.
Before this law, which received support from both political parties, it was estimated that around 20% of drivers in Michigan and 60% in Detroit didn’t have car insurance, according to officials.
“Under the old auto insurance law, too many Michiganders had to face the financial and legal risks of driving without insurance, and the new law has made it possible for more Michiganders to protect themselves and their families with auto insurance,” said DIFS Director Anita Fox.
“In addition to increasing consumer protections and reducing the number of uninsured drivers, the new law has increased competition by encouraging new companies and affiliates to enter the Michigan market.”
Before the changes, Michigan had the highest car insurance costs in the country. Some drivers paid around $2,610 each year, while in Michigan’s capital, it was as high as $5,414 yearly, as reported by DIFS.
The reason the largest city in Michigan’s insurance was so pricey was because of many large Personal Injury Protection claims and insurers setting rates based on factors not related to driving, officials explained.
Yet, the 2019 law helped more people get insurance thanks to several key protections for consumers, DIFS pointed out. These protections include:
New low-cost options and rate reductions
Previously in Michigan, every driver was required to purchase unlimited Personal Injury Protection (PIP) medical insurance. This was expensive, and as a result, some drivers who couldn’t afford it chose to drive without legal insurance. However, now there’s a change.
Drivers have six PIP medical coverage choices. These range from unlimited coverage to even having the option to not have any coverage at all. Also, the new law enforced average rate cuts across the state for PIP medical insurance. Insurance companies have been following this rule, meeting or going beyond the required rate cuts for all levels of PIP medical coverage.
Amnesty period for uninsured drivers
To help lower the number of uninsured drivers, Michigan offered a special period where drivers without insurance could buy it without extra fees or higher rates just because they were previously uninsured. This helped a lot. Over 202,000 people in Michigan who didn’t have car insurance before took advantage of this offer before it ended on January 1, 2022. This included more than 83,200 individuals who hadn’t had insurance for over three years.
Elimination of certain non-driving factors from the rating process
The new rule stops car insurance companies from considering factors like gender, marital status, owning a home, credit score, education, job, and where you live when deciding your car insurance rates. This key change has helped lower insurance costs and made it easier for more people to get insured.
As a result of these changes, the study showed that more people in Michigan could now afford insurance, which means more people are driving legally, according to officials.
You can find the complete study by the Insurance Research Council on this link.