Posted on 09/04/2012 1:56:10 PM PDT by MichCapCon
A recent study found that Michigan’s car insurance rates are the highest in the nation.
When looked at as a percent of annual median household income, Michigan drivers spend 8 percent on car insurance, according to CarInsuranceQuote.com.
The next highest state was Louisiana at 5.5 percent. Michigan’s rates as a percentage of income were nearly double that of the fifth-most expensive state, Mississippi, which came in at 4.04 percent.
When looking at the median price of an annual car insurance policy, the result is the same. Michigan is No. 1 at $4,490, and by far the most expensive state for car insurance. Only one other state has a median price above $2,500, and that is New Jersey at $2,556. The District of Columbia has the second highest rate at $2,570.
The findings on 2012 rates are consistent with other studies of auto insurance. In a 2011 study, Professor Sharon Tennyson of Cornell University found that Michigan’s average insurance premiums grew 30.5 percent from 1997 to 2007, while national average premiums rose by 13.7 percent.
There are a number of reasons that Michigan has high rates for auto insurance. It is one of only 12 states to use no-fault insurance. Massachusetts was the first state to adopt no-fault insurance in 1971, and several states adopted it in the 1970s, but its popularity has waned.
In a RAND study examining no-fault insurance, the authors found that no-fault states have higher premiums than tort law states — where the driver at fault is responsible for paying medical expenses and other damages — generally due to higher medical costs in no-fault states.
Michigan stands out among all states in being the only one to require drivers to purchase unlimited personal injury protection. The state with the next-highest required amount of personal injury protection insurance is New York, where the mandated coverage is $50,000.
Another RAND study on auto insurance in Michigan found that it costs 57 percent more to settle a Michigan claim for person injury than the same injury would cost in another state. It also showed that Michigan injury losses per insured vehicle were 40 percent higher than in the U.S. as a whole.
The reason for this higher cost is not that the share of claimants who seek medical treatment after an accident is appreciably higher in Michigan, but it is that the mix of services is much more costly. Unlimited personal injury protection results in incentives to use the most costly procedures available, since insurance will pay for it, and it creates enormous uncertainty about what the cost of any accident might be. Both of these factors drive up premiums.
Conducting a study for AAA Michigan, Mitchell DecisionPoint found that the cost of the same medical procedure in Detroit was significantly higher if paid by no-fault insurance than otherwise. For example, an MRI on the neck was $3,258 when required because of a car accident and paid for in a no-fault insurance claim, and $483 under Medicare. Shoulder surgery was four times more costly when paid for under no-fault insurance than under Medicare.
Clearly, Michigan has very high auto insurance premiums, and there are economic distortions in the insurance market that result in loss of efficiencies. The Legislature should continue with its analysis of the insurance market, in particular the aspect of the market that sets Michigan apart from every other state — the unlimited personal injury protection requirement.
Insane insurance scheme. Gov. Snyder has acknowledged that change is needed. The good news for Michigan car owners is that there are NO STATE EPA bureaucrats driving up the cost of ownership with useless smog and OBDC compliance repairs/fees like Illinois (Chicago area).
Best way to get a status on No-Fault and Obamacare exchanges: Gov. Snyder uses Livestream to host cyber townhall meetings via the web. You can ask questions online or via telephone.
I live in various places during the year, but none has a governor that offers citizens direct access like Rick Snyder.
Don't even mention this to my "insurance gnome", they go on a screed. They claim it is a job killer as well i.e. fleet vehicles...
This is just another Democrat wealth transfer mechanism.
Unlimited liability insurance
bigger tort awards
more income for attorneys
more donations to Democrats
just like “big education”
Unfortunately our Governor is an Ann Arbor “republican” who is about as conservative as Jenny Granholm. He’s done nothing but drag his feet on unions, loves high speed rail, is full of green tech and energy fantasies, and is willing to spend state and federal money like we’ll never run out.
Sadly I agree with him on the need for a second bridge over the Detroit river (Its still the second busiest freight crossing in America) but he’s pissed off enough people for other reasons that it will probably never get built.
I have had some unanswered questions regarding that life style.
Most States seen to require a 6 mo per year residency to be a citizen of same.
Is it possible to be a US citizen, but not a State (/territory) citizen?
Can you get a US driver's license rather than a State issued one?
What about voting, state taxes, "permanent address", etc.?
Yes, my understanding is the 183-day rule for IRS and state income tax purposes (if applicable). If you live inside or outside of a state for 183 days in the calendar year (tax year for ordinary taxpayers on a cash accounting basis), this standard will be used to determine your tax home.
For voting and driver license purposes, the 183-day rule does not apply. Most states will consider you a full-time resident after so many days of continuous residency and expect you to get a driver license. Voter registration may be part of the “”motor voter” process.
I have a single driver license, but multiple vehicles registered, titled and insured in the states where locally stored/used. Sadly, you have to get separate auto insurance policies if you go this route (thousands of miles apart).
I vote in a single state which is my tax state. I hope to change over time to a more favorable environment. My jury duty obligation is tied to my driver license as that is the test used by court officials.
"Urban Outdoorsmen" would seem to be the extreme case.
I've had issues with registering a vehicle in a state where I live for a couple of months a year but don't own property (the vehicle never leaves the State).
It seems that the laws of the various States don't provide a consistent (or even possible) resolution to any number of issues. Finessing the situation(s) seems to be the only available option at the moment.
Um, i’d like to know the details. Cause I set up one and it was on google, the reps. Invited “selected” few and the questions were written and handed to the state rep. who decided what questions were asked. Kind of reminded me of a Obama press conference. BTW there was no access to call in.
The key to registering the vehicle in most states is to transfer the title to your in state address. I have done this several times and no Secretary of State/DMV employee has ever asked to see the vehicle even though was it available to show.
Other than a leased new vehicle, I WILL NEVER register an non-classic auto that I own outright in a state with EPA smog testing - that is a fools errand - not to mention expensive.
I participated in the Governor’s streaming events from his Facebook page which may also be linked to RickforMI. I could see the questions being submitted online. To streamline things, the Governor’s staff grouped the questions (mine was grouped with other no-fault questions/concerns). The questions submitted by phone made up about half of the questions.
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