Michigan sees reduction in auto insurance costs after law reform

Michigan drivers are seeing a significant reduction in auto insurance costs following changes to the state’s no-fault system in 2020, according to a paper from the Insurance Information Institute (Triple-I).

The paper, co-authored by Triple-I non-resident scholars Dr. Patricia Born of Florida State University and Dr. Robert Klein of Temple University, found that personal auto insurers are paying out fewer claims, and policyholders are paying less in premiums.

“Our initial evaluation of the likely effects of the reform legislation indicates that it is significantly reducing the costs of auto insurance for many Michigan drivers,” the paper read. “How much these reductions will be for any given driver will depend on the PIP (personal injury protection) option they choose among other factors.”

Prior to the enactment of its no-fault auto insurance system reform law in July 2020, Michigan was consistently identified as one of the most expensive states for personal auto insurance coverage.

This is because Michigan was the only state to offer unlimited medical benefits through the PIP portion of an auto insurance policy, the paper revealed, in addition to insurers being severely constrained in controlling the medical costs arising from PIP claims.