Report: Michigan has highest car insurance costs in nation

By Melissa Anders |

Michiganders pay a larger portion of their salaries on car insurance than residents of any other state, according to a study released today by

“Middle-of-the-road” policy holders from Michigan spend about 8 percent of their median household income for car insurance, the report found. The next highest state is Louisiana, where motorists pay more than 5 percent of their income. The lowest proportional cost is in Massachusetts, where policy holders pay about 1.4 percent on their income.

Michigan law requires drivers to carry no-fault insurance, which provides unlimited lifetime medical care for auto-related injuries. It’s the only state that guarantees unlimited personal injury protection.

The figures are based on car insurance data from June 2012 and median household income data from 2010. The rates were based on actual customer profiles of online car insurance shoppers that can include multiple drivers, multiple vehicles and other variables, according to

The median price of an annual car insurance policy is $4,490, while the median household income for Michigan was $56,101 in 2010.

North Carolina had the lowest annual car insurance cost at $860, according to the report.

A different study from Runzheimer International found that Detroit had the highest rates in the nation last year with an average annual premium of $5,941.

Consumers need to be careful when looking at insurance statistics because Michigan can only offer discounts on base rates, whereas other states impose surcharges based on various factors, said Pete Kuhnmuench, executive director of the Insurance Institute of Michigan.

He challenged the figures, saying that statistics from the National Association of Insurance Commissioners are more accurate by dividing the total premiums paid by the number of car years insured.

Michigan’s average premium according to the NAIC was $1,042 in 2009, the most recent data available. That makes it 11th highest in the nation.

“In Michigan, we mandate highest level of benefit in any state of the country,” Kuhnmuench said.

The state’s no-fault system mandates unlimited lifetime medical benefits. The next highest requirements come from New York and New Jersey. New York requires $50,000 for personal injury protection, while New Jersey requires a basic benefit of $15,000 and $250,000 for certain critical injuries.

The Insurance Institute of Michigan has been pushing for legislation to let consumers choose their level of personal injury protection coverage. So far it has not passed the state House or Senate.

The average personal injury protection (PIP) claim rose more than 166 percent over 10 years, from $13,617 in 2000 to $36,245 in 2010, according to the institute.

This month, the Michigan Catastrophic Claims Association increased the premium paid for catastrophic coverage by 21 percent to $175 per insured vehicle. The private, nonprofit association reimburses auto insurers for personal injury protection benefits after they exceed $500,000 per claim.

The Coalition Protecting Auto No Fault (CPAN) wants to keep the no-fault system, but supports other efforts to rein in costs.

“We certainly want to find cost efficiencies and address fraud in a very fair and balanced way,” said Kevin McKinney, legislative consultant for CPAN.

The group also wants state regulators to approve appropriate discounts for customers that coordinate their health insurance and auto policies.