Why Is Car Insurance So Expensive in Detroit?

Last Updated on December 17, 2022

Detroit may be known as the Motor City, but not everything’s great for drivers here. Many people are shocked to learn that Detroit (and the entire state of Michigan) has the most expensive car insurance in the entire country. The average premium in Michigan is over 80 percent higher than the national average for car insurance premiums. If you live in Detroit, you’re probably wondering why exactly your car insurance prices are so high – and what you can do to bring them down. Here’s why car insurance is so expensive in Detroit.

Michigan Requires PIP Coverage for All Drivers.

One of the biggest reasons why insurance is so expensive in Detroit is because Michigan requires personal injury protection, or PIP, for all drivers. PIP is designed to pay your or your passenger’s medical bills if you are injured in an accident, regardless of who is at fault. PIP coverage is very expensive for insurers to provide, so those additional costs get passed on to drivers.

Because auto insurance companies are required to provide PIP in Michigan, this can cause health insurance companies to start cutting corners. Michigan law has allowed health insurance providers to negotiate discounts with healthcare providers, which means that auto insurance companies can get stuck with hefty medical bills after an accident.

Unfortunately, PIP coverage is required to be unlimited in Michigan, meaning that there is no limit to the medical bills insurance companies have to cover. This means that Michigan drivers will be hit with hefty insurance premiums to cover the cost.

Many Drivers Go Without Insurance in Michigan.

Because auto insurance is so expensive in Michigan, many drivers opt to go without it. Many of Michigan’s largest cities, including Detroit, have a high poverty rate, so many people can’t actually afford the high price of insurance. While countrywide, about 1 in 7 drivers are uninsured, it’s estimated that about 60% of drivers in Detroit go without car insurance. When uninsured rates are this high, insurance companies increase their premiums for those who do have insurance. If you get into an accident with an uninsured driver, your insurance company would need to cover the damages, regardless of who is at fault – hence the high premiums.

No-Fault Rules Lead to More Lawsuits – and More Fraud.

Michigan is a no-fault state, meaning that insurers must cover their customers with PIP protection regardless of who is at fault in the accident. (Property damage coverage is still determined by fault). No-fault rules mean that it’s much easier for customers to sue their insurance companies for coverage, which results in expensive litigation costs for the insurers. No-fault rules also make Michigan insurers a target for fraud, as it’s easier for fraudsters to file claims for things like ongoing medical care or lost wages even when they’re unnecessary.

Auto Insurance Regulation Is Influenced by Lobby Groups.

Although the government in Michigan has made overtures towards regulating auto insurance prices, their progress has been limited by lobby groups. While Michigan’s no-fault laws have driven prices up, legal groups have fought to keep them to provide protection for those who are injured in serious accidents. Medical groups have also lobbied for the no-fault protections, as they keep expenses down for health insurers. This consistent lobbying has made it difficult for the government to implement auto insurance regulations.

Detroit Has High Rates of Car Theft and Other Crimes.

Detroit is also known for its high crime rate, with a particularly high rate of car theft and vandalism when compared to other parts of the country. Insurance companies often become liable for crime-related car repairs for those who have comprehensive car insurance policies. When combined with Michigan’s unique car insurance regulations, this has pushed the prices of car insurance in Detroit through the roof.

Detroit’s Roads Are in Relatively Poor Condition.

Another factor that influences the price of car insurance in Detroit is road conditions. The Detroit city government’s ongoing financial problems have made them unable to afford to fix problems like potholes, which can cause major damage to your vehicle if you are unable to avoid them.

Detroit Has Harsh Winters.

Like many other parts of the Midwest, Detroit experiences a harsh winter season with lots of snow and ice. This can make it more difficult to drive, and accidents are more likely to happen. This is another factor that can affect Detroit’s high car insurance prices.

How Can I Save Money on Car Insurance in Detroit?

The unfortunate truth is that until legislation changes, car insurance in Detroit will always be higher than average. However, there are some things you can do to help lower your monthly car insurance bill. Here’s what to consider.

• Drive safely and avoid filing claims for small incidents. One of the best ways to keep your car insurance costs low is simply to have a good driving record. Follow the rules of the road and avoid driving while distracted or under the influence at all costs. If you get into a small accident that you can afford to repair yourself, don’t report it to your insurance company. Every time you make a claim, your rates will go up, so it’s more financially beneficial in the long run to repair small problems yourself.
• Raise your deductible. The deductible is the amount you’ll pay out of pocket before your insurance kicks in when you file a claim. When you raise your deductible, your monthly premiums will automatically go down. If you opt to go this route, make sure you have money put away to pay your deductible if you do have to file a claim.
• Ask about discount options. Many insurance companies have discounts for things like being a homeowner or having military experience. You might be surprised by what can save you money, so be sure to ask your insurance agent about the discounts available to you.
• Take a defensive driving course. Many companies will offer discounts for taking a simple driver’s safety course online or in-person at a local driving school. This is a particularly great option for those who have points on their license or who have had an accident in the past that has driven their premiums up.

Final Word on Detroit’s High Auto Insurance Rates

Michigan is the most expensive state in the country for auto insurance. Its largest city, Detroit, is the most expensive city in the country for auto insurance. The combination of its stringent laws, uninsured drivers, high crime, and harsh environment make Detroit the most expensive place to insure your vehicle.

Although car insurance can be expensive in Detroit, there are things you can do to bring costs down. While living in Detroit, you might never be able to get your auto insurance rates down to the level of other places in the country, but you can still save hundreds per year on your premiums by taking some basic measures. Talk to an insurance agent today to see which options and discounts are available to you.