{"id":320824,"date":"2025-11-07T15:00:29","date_gmt":"2025-11-07T20:00:29","guid":{"rendered":"https:\/\/www.reviews.com\/?p=123949"},"modified":"2025-11-07T15:00:29","modified_gmt":"2025-11-07T20:00:29","slug":"michigan-legislation","status":"publish","type":"post","link":"https:\/\/www.reviews.com\/insurance\/car\/michigan-legislation\/","title":{"rendered":"Michigan has a plan to fix auto insurance. Could other states follow?"},"content":{"rendered":"\n\n\n<p>Michigan lawmakers passed auto insurance reform legislation in 2019 that state Gov. Gretchen Whitmer <a href=\"https:\/\/twitter.com\/GovWhitmer\/status\/1132043627448995840\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">has called<\/a> \u201ctruly historic.\u201d The law took effect <a href=\"https:\/\/www.freep.com\/story\/news\/politics\/2019\/05\/24\/explainer-michigan-auto-insurance-premiums\/1221083001\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">in July 2020<\/a> 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\u2011driving rating factors.<\/p>\n\n\n<p><\/p>\n<p><\/p><center><p><\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p dir=\"ltr\" lang=\"en\">Yes, you heard correctly.<br>We ? have ? a ? deal ? <a href=\"https:\/\/t.co\/nJ1VvJQ1ov\">pic.twitter.com\/nJ1VvJQ1ov<\/a><\/p>\n<p>\u2014 Governor Gretchen Whitmer (@GovWhitmer) <a href=\"https:\/\/twitter.com\/GovWhitmer\/status\/1131909075741138944?ref_src=twsrc%5Etfw\">May 24, 2019<\/a><\/p>\n<\/blockquote>\n<p><script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p><\/p>\n<p><\/p><\/center><p><\/p>\n\n\n<p>This reform had been a long time coming. In 2025, Michigan still ranks among the top 3\u20135 most expensive states for auto insurance, with average full\u2011coverage premiums in the mid\u2011$3,000s and Detroit prices substantially higher (<a href=\"https:\/\/www.thezebra.com\/auto-insurance\/michigan-car-insurance\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">The Zebra<\/a>; <a href=\"https:\/\/www.bankrate.com\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Bankrate<\/a>; <a href=\"https:\/\/www.nerdwallet.com\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">NerdWallet<\/a>). Early post\u20112020 PIP savings for many drivers were later pressured by nationwide claims inflation and Michigan\u2011specific legal and assessment dynamics, including the Michigan Supreme Court\u2019s <a href=\"https:\/\/www.courts.michigan.gov\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Andary<\/a> decision and changes to the <a href=\"https:\/\/www.michigan.gov\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">MCCA assessment<\/a>. 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 <a href=\"https:\/\/www.crainsdetroit.com\/article\/20171022\/news\/642726\/how-michigans-auto-insurance-premiums-became-the-highest-in-the-country\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">steadily rose<\/a>, and they continue to monitor outcomes of the reform (<a href=\"https:\/\/www.michigan.gov\/autoinsurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">State of Michigan DIFS<\/a>).<\/p>\n\n\n\n<p>This is an extreme case, to be sure, as Michigan\u2019s unique auto insurance laws \u2014 including an optional unlimited lifetime PIP medical benefit \u2014 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\u2019s experience may inform future regulatory changes elsewhere (<a href=\"https:\/\/www.iii.org\/article\/no-fault-auto-insurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Insurance Information Institute<\/a>; <a href=\"https:\/\/www.michigan.gov\/autoinsurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">DIFS<\/a>).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Cost of Auto Insurance in Michigan<\/h2>\n\n\n\n<p>As of 2025, recent market benchmarks place Michigan\u2019s statewide average annual premium for full coverage roughly in the mid\u2011$3,000s, with minimum\u2011coverage averages around the low\u2011$1,000s, according to <a href=\"https:\/\/www.bankrate.com\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Bankrate<\/a>, <a href=\"https:\/\/www.nerdwallet.com\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">NerdWallet<\/a>, and <a href=\"https:\/\/www.thezebra.com\/auto-insurance\/michigan-car-insurance\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">The Zebra<\/a>.<\/p>\n\n\n\n<p>At these price levels, car insurance can exceed the \u201caffordable\u201d benchmark in many ZIP codes \u2014 the <a href=\"https:\/\/poverty.umich.edu\/files\/2019\/03\/PovertySolutions-CarInsurance-PolicyBrief-r1.pdf\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">University of Michigan<\/a> has highlighted how premiums consume a significant share of income in many communities \u2014 and by the <a href=\"https:\/\/www.treasury.gov\/initiatives\/fio\/reports-and-notices\/Documents\/FINAL%20Auto%20Affordability%20Study_web.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">U.S. Treasury\u2019s<\/a> standard, insurance exceeding 2% of a ZIP code\u2019s median income is deemed \u201cunaffordable.\u201d<\/p>\n\n\n\n<p>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 \u2014 far above the statewide average \u2014 according to <a href=\"https:\/\/www.thezebra.com\/auto-insurance\/michigan-car-insurance\/\" target=\"_blank\" rel=\"noreferrer noopener\">The Zebra<\/a>.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote\"><p>Michigan\u2019s average full\u2011coverage premium sits in the mid\u2011$3,000s\u2014among the top 3\u20135 most expensive states nationally\u2014and premiums in Detroit and other high\u2011risk ZIP codes run even higher (<a href=\"https:\/\/www.thezebra.com\/auto-insurance\/michigan-car-insurance\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">source<\/a>).<\/p><\/blockquote>\n\n\n\n<p>Rates are so high that many people either opt not to drive \u2014 which can create a serious <a href=\"https:\/\/poverty.umich.edu\/files\/2019\/03\/PovertySolutions-CarInsurance-PolicyBrief-r1.pdf\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">barrier to job opportunities and basic resources<\/a> \u2014 or simply drive without insurance. Michigan\u2019s 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% (<a href=\"https:\/\/www.iii.org\/fact-statistic\/facts-statistics-uninsured-motorists\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Insurance Information Institute<\/a>; <a href=\"https:\/\/www.insurance-research.org\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Insurance Research Council<\/a>). The risks remain significant for <a href=\"https:\/\/www.reviews.com\/insurance\/car\/motorist-coverage\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">uninsured drivers<\/a>.<\/p>\n\n\n\n<p>That\u2019s problematic for a few reasons. First, because Michigan is a <a href=\"https:\/\/www.reviews.com\/insurance\/car\/no-fault-car-insurance\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">no-fault state<\/a> (see <a href=\"https:\/\/www.michigan.gov\/autoinsurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">DIFS overview<\/a>), 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\u2019t do so, and don\u2019t have health insurance to fall back on, those costs might end up being absorbed by the state through Medicare or Medicaid or go unpaid.<\/p>\n\n\n\n<p>In addition, those caught driving <a href=\"https:\/\/www.legislature.mi.gov\/(S(a2sfwfaencpuqdbzh1pb4sht))\/mileg.aspx?page=getobject&amp;objectName=mcl-500-3102\" target=\"_blank\" rel=\"noreferrer noopener\">without insurance<\/a> could potentially face a fine between $200 and $500 and up to a year in prison, adding insult to injury for drivers that couldn\u2019t afford car insurance in the first place but must drive as a necessity of their day-to-day life.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How Michigan\u2019s Auto Insurance Rates Got So High<\/h2>\n\n\n\n<p>Car insurance rates are based on many different factors, but when it comes to Michigan\u2019s sky-high premiums, one factor has loomed above the rest \u2014 PIP coverage and the historically unlimited medical benefit many drivers chose before reform.<\/p>\n\n\n\n<p>Michigan is one of <a href=\"https:\/\/www.reviews.com\/insurance\/car\/no-fault-car-insurance\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">no-fault state<\/a> 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 (<a href=\"https:\/\/www.michigan.gov\/autoinsurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">DIFS<\/a>).<\/p>\n\n\n\n<p>Here\u2019s the kicker, though: Most PIP jurisdictions set fixed medical caps (commonly $8,000\u2013$50,000), while Michigan uniquely still offers an Unlimited lifetime medical option alongside capped choices (<a href=\"https:\/\/www.iii.org\/article\/no-fault-auto-insurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">overview<\/a>).<\/p>\n\n\n\n<p>That means your own insurance company must cover all medical costs stemming from an accident \u2014 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.<\/p>\n\n\n\n<p>While unlimited PIP is an invaluable safety net (\u201cthe gold standard in terms of medical care for drivers,\u201d as <a href=\"https:\/\/www.michiganradio.org\/post\/lawmakers-explore-option-eliminate-no-fault-auto-insurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Michigan Radio<\/a> called it), it also puts a heavy financial burden on insurance companies. Post\u2011reform, a medical fee schedule curbed some PIP claim costs, but the 2023 <a href=\"https:\/\/www.courts.michigan.gov\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Andary<\/a> ruling increased liabilities for pre\u2011reform injuries, and the <a href=\"https:\/\/www.michigan.gov\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">MCCA assessment<\/a> 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.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote\"><p>PIP choices (including Michigan\u2019s 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\u2019s expensive auto insurance.<\/p><\/blockquote>\n\n\n\n<p>Of course, there\u2019s never just one side to an insurance story. Though PIP is the most glaring reason for Michigan\u2019s high rates, it\u2019s not the only culprit.<\/p>\n\n\n\n<p>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 (<a href=\"https:\/\/www.iii.org\/fact-statistic\/facts-statistics-uninsured-motorists\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">III<\/a>).<\/p>\n\n\n\n<p>That price hike is compounded still further for low-income drivers. Going uninsured for a time (whether by choice or because someone simply can\u2019t afford it) lands drivers in a higher \u201crisk class,\u201d so they\u2019ll end up paying a lot more when they do reapply for coverage.<\/p>\n\n\n\n<p>Michigan\u2019s unlimited PIP law and broader no\u2011fault framework have also been associated with above-average legal frictions. Although no-fault laws were <a href=\"https:\/\/www.iii.org\/article\/background-on-no-fault-auto-insurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">originally intended<\/a> to reduce time and money spent in court \u2014 and actually lower insurance costs as a result \u2014 attorney involvement remains high nationally, and the <a href=\"https:\/\/www.courts.michigan.gov\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Andary<\/a> decision revived disputes on legacy catastrophic claims, adding further cost pressures.<\/p>\n\n\n\n<p>\u201cPeople are hiring personal injury attorneys to fight for [them] &#8230; to get the maximum amount of benefits for their medical claims, long-term care, and for lost wages,\u201d Chad Livengood of Crain\u2019s Detroit Business told <a href=\"https:\/\/www.michiganradio.org\/post\/lawmakers-explore-option-eliminate-no-fault-auto-insurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Minnesota Radio<\/a>. He claimed about one third of all civil litigation cases in Michigan are auto insurance-related.<\/p>\n\n\n\n<p>Fraud also remains a concern. State prosecutors continue to pursue staged crashes, inflated medical billing, and premium evasion through the Attorney General\u2019s <a href=\"https:\/\/www.michigan.gov\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Auto Insurance Fraud Unit<\/a>, and the National Insurance Crime Bureau reports rising \u201cquestionable claims\u201d through 2023 nationwide (<a href=\"https:\/\/www.nicb.org\/news\/news-releases\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">NICB<\/a>), keeping upward pressure on premiums.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Michigan\u2019s Plan to Lower Auto Insurance Rates<\/h2>\n\n\n\n<p>After years of indecision (and a 2018 gubernatorial race where <a href=\"https:\/\/www.crainsdetroit.com\/article\/20180729\/blog026\/667201\/auto-insurance-where-the-governor-candidates-stand\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">insurance prices were a top issue<\/a> 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\u2019s reform platform.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/assets.reviews.com\/uploads\/2019\/05\/28154022\/1124207166911722.vW6Tt5bzkH8lrz7gjyIV_height640.png\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/assets.reviews.com\/uploads\/2019\/05\/28154022\/1124207166911722.vW6Tt5bzkH8lrz7gjyIV_height640.png\" height=\"387\" width=\"640\"  alt=\"Michigan auto insurance reform-2\" class=\"wp-image-123952\"\/><\/a><figcaption><em>Gov. Gretchen Whitmer, Democrat (above) worked with party leaders from the Republican-led legislature to come to an agreement about auto insurance reform in 2019. Image: Getty<\/em><\/figcaption><\/figure>\n\n\n\n<p>Before passage in 2019, lawmakers in Michigan <a href=\"https:\/\/www.bridgemi.com\/public-sector\/michigan-republicans-and-whitmer-move-closer-no-fault-auto-insurance-deal\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">struggled to settle<\/a> 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.<\/p>\n\n\n\n<p>Effective July 1, 2020, <a href=\"https:\/\/www.insurancejournal.com\/blogs\/right-street\/2019\/05\/28\/527607.htm\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">the new law<\/a> eliminated Michigan\u2019s 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 (<a href=\"https:\/\/www.michigan.gov\/autoinsurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">DIFS<\/a>).<\/p>\n\n\n\n<p>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 (<a href=\"https:\/\/www.legislature.mi.gov\/documents\/mcl\/pdf\/mcl-500-2111.pdf\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">MCL 500.2111<\/a>).<\/p>\n\n\n\n<blockquote class=\"wp-block-quote\"><p>Michigan\u2019s 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 (<a href=\"https:\/\/www.michigan.gov\/autoinsurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">DIFS<\/a>).<\/p><\/blockquote>\n\n\n\n<p>The other big change was a medical fee schedule for providers (phased in starting July 2021) and a 56\u2011hour 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 \u2014 an approach <a href=\"https:\/\/www.insurancejournal.com\/blogs\/right-street\/2019\/05\/28\/527607.htm\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">the Insurance Journal<\/a> 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 (<a href=\"https:\/\/www.courts.michigan.gov\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Andary v. USAA<\/a>).<\/p>\n\n\n\n<p>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\u20132025 in line with national loss trends and post\u2011Andary\/MCCA dynamics. Current statewide averages for full coverage sit in the mid\u2011$3,000s, with minimum coverage in the low\u2011$1,000s (<a href=\"https:\/\/www.bankrate.com\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Bankrate<\/a>; <a href=\"https:\/\/www.thezebra.com\/auto-insurance\/michigan-car-insurance\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">The Zebra<\/a>; <a href=\"https:\/\/www.nerdwallet.com\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">NerdWallet<\/a>).<\/p>\n\n\n\n<p>In other words: Michigan\u2019s 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\u2011reform baselines. Watching the annual <a href=\"https:\/\/www.michigan.gov\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">MCCA assessment<\/a> and future legislative adjustments will be key.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Michigan Isn\u2019t the Only State Feeling Insurance Pains<\/h2>\n\n\n\n<p>Though Michigan\u2019s reform affects its residents most directly, other states are watching closely. No-fault\/PIP remains in a core group of jurisdictions, and Michigan\u2019s post\u20112020 experience may shape future policy debates elsewhere (<a href=\"https:\/\/www.iii.org\/article\/no-fault-auto-insurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">III overview<\/a>).<\/p>\n\n\n\n<p>For example, Michigan isn\u2019t 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 (<a href=\"https:\/\/www.iii.org\/article\/background-on-no-fault-auto-insurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Insurance Information Institute<\/a>).<\/p>\n\n\n\n<p>As <a href=\"https:\/\/www.pewtrusts.org\/en\/research-and-analysis\/blogs\/stateline\/2016\/09\/09\/is-no-fault-auto-insurance-to-blame-for-high-rates-fraud\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Pew Research put it<\/a> in 2016: \u201cBy 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.\u201d<\/p>\n\n\n\n<p>The outcry has been loudest in Florida, New Jersey, and New York, as insurance analyst Craig Casazza <a href=\"https:\/\/www.forbes.com\/sites\/ccasazza\/2017\/07\/07\/is-it-time-to-do-away-with-no-fault-laws\/#317cd777bb66\" target=\"_blank\" rel=\"noreferrer noopener\">wrote for Forbes<\/a>. 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\u20135 most expensive states, with large cities such as Detroit priced far above statewide averages (<a href=\"https:\/\/www.thezebra.com\/auto-insurance\/michigan-car-insurance\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">The Zebra<\/a>). On uninsured motorists, Michigan stood at 19.6% in 2022 versus 14.0% nationally (<a href=\"https:\/\/www.iii.org\/fact-statistic\/facts-statistics-uninsured-motorists\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">III<\/a>).<\/p>\n\n\n\n<p>Still, many drivers reject the idea of a cold-turkey break from PIP insurance. For those that have benefited from the protection PIP offers \u2014 especially in Michigan, where coverage can be Unlimited \u2014 it\u2019s 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.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote\"><p>No-fault remains in place in core jurisdictions, and many states \u2014 notably Michigan, California, and Massachusetts \u2014 have restricted non-driving factors like gender, marital status, credit, education, and occupation in rate-setting (<a href=\"https:\/\/www.iii.org\/article\/no-fault-auto-insurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">III<\/a>; <a href=\"https:\/\/www.insurance.ca.gov\/0250-insurers\/0300-insurers\/0100-applications\/AutomobileRegulations\/GenderNondiscrimination.cfm\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">California DOI<\/a>; <a href=\"https:\/\/www.legislature.mi.gov\/documents\/mcl\/pdf\/mcl-500-2111.pdf\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">MCL 500.2111<\/a>).<\/p><\/blockquote>\n\n\n\n<p>Then there\u2019s the question of non-driving rating factors, on which Michigan Democrats centered their reform campaign.<\/p>\n\n\n\n<p>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\u2019ve been shown to correlate to \u201crisk level\u201d in some way or another.<\/p>\n\n\n\n<p>For example, a 2007 study from the <a href=\"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/reports\/credit-based-insurance-scores-impacts-consumers-automobile-insurance-report-congress-federal-trade\/p044804facta_report_credit-based_insurance_scores.pdf\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">U.S. Federal Trade Commission<\/a> found that credit scores correlate to both the number and cost of claims filed by customers, and are therefore \u201ceffective predictors of risk under automobile policies.\u201d Similar results have surfaced around factors like ZIP code, gender, and marital status.<\/p>\n\n\n\n<p>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\u2019s totally out of your control, which is why a number of states have banned gender-based insurance pricing, as the <a href=\"https:\/\/www.washingtonpost.com\" target=\"_blank\" rel=\"noreferrer noopener\">Washington Post<\/a> reported.<\/p>\n\n\n\n<p>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 \u2014 however, it\u2019s 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.<\/p>\n\n\n\n<p>That\u2019s why Michigan and other states, like Maryland, have vied for ratings systems that depend more heavily on residents\u2019 driving records to set rates, as the <a href=\"https:\/\/www.washingtonpost.com\" target=\"_blank\" rel=\"noreferrer noopener\">Post reported<\/a> 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 (<a href=\"https:\/\/doi.colorado.gov\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Colorado DOI<\/a>).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Auto Insurance Reform In Michigan Could Pave the Way for Others<\/h2>\n\n\n\n<p>Michigan\u2019s auto insurance industry was more broken than most, but it\u2019s 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\u2019s post\u20112020 outcomes \u2014 early premium relief, a later run\u2011up in overall rates, a decline in uninsured motorists, and ongoing debates about catastrophic care \u2014 will likely inform future reforms elsewhere (<a href=\"https:\/\/www.michigan.gov\/autoinsurance\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">DIFS<\/a>; <a href=\"https:\/\/www.iii.org\/fact-statistic\/facts-statistics-uninsured-motorists\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">III<\/a>).<\/p>\n\n\n\n<p>Of course, change doesn\u2019t 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 \u201c<a href=\"https:\/\/www.reviews.com\/insurance\/homeowners\/should-you-choose-a-digital-insurance-company\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">digital insurers<\/a>\u201d increasingly use telematics\/UBI and connected-car data to price more precisely, often rewarding safer or lower-mileage drivers (<a href=\"https:\/\/content.naic.org\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">NAIC<\/a>).<\/p>\n\n\n\n<p>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\u2019t change across the board until lawmakers can agree on the right course of action \u2014 and regulators are increasingly setting expectations for fairness and transparency in AI and telematics programs (<a href=\"https:\/\/doi.colorado.gov\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Colorado DOI<\/a>).<\/p>\n\n\n\n<p>If Michigan\u2019s 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.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Further Reading on Consumer Insurance Trends<\/h2>\n\n\n\n<ul><li><a href=\"https:\/\/www.reviews.com\/insurance\/homeowners\/should-you-choose-a-digital-insurance-company\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">digital insurers<\/a><\/li><li><a href=\"https:\/\/www.reviews.com\/insurance\/life\/social-media-underwriting-process\/\">Insurers Can See Your Social Media. Is It Time to Scrub Your Profiles? <\/a><\/li><li><a href=\"https:\/\/www.reviews.com\/insurance\/homeowners\/smart-home-insurance\/\">What Happens When Smart Home Tech and Insurance Meet<\/a><\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Michigan lawmakers passed auto insurance reform legislation in 2019 that state Gov. Gretchen Whitmer has called \u201ctruly historic.\u201d 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\u2011driving rating factors. Yes, you [&hellip;]<\/p>\n","protected":false},"author":345,"featured_media":123951,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1266],"tags":[],"post_author":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Michigan has a plan to fix auto insurance. Could other states follow? - Reviews.com<\/title>\n<meta name=\"description\" content=\"Michigan lawmakers produced historic auto insurance legislation aimed at reducing costs to drivers. 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