Triple-I Blog | No-Fault Amendments in Michigan Offer Fewer Claims, Fewer Claims

By Max Dorfman, Research Writer, Triple-I

Michigan’s no-fault reform law, which takes effect in 2020, has led to lower premiums for auto insurers and lower premiums for more drivers, according to a recent study by two non-Triple-I experts.

research, No Changes to Car Insurance in Michigan: A First Look, written by Patricia Born, Ph.D. of Florida State University and Robert Klein, Ph.D. of Temple University, sees a significant decrease in loan payments and loss of personal protection (PIP) premiums in 2022. PIP covers coverage for injuries to the driver and passengers of the owner’s vehicle in no-fault insurance.

“Our preliminary analysis of the effects of this change shows that it will significantly reduce the cost of auto insurance for many Michigan drivers,” the paper said. “What this reduction will be for each driver will depend on the PIP option they choose, among other things.”

Michigan policyholders will pay $2,611 a year for auto insurance in 2019 and $2,133 in 2022, an 18 percent decrease, according to Before the state’s no-fault auto insurance reform law went into effect in July 2020, Michigan consistently ranked as one of the most expensive states in the US to pay for auto insurance.

The 2020 amendment allows for:

  • Reduced auto insurance reimbursement for high PIP medical benefits;
  • Establishing drug price controls;
  • Expanding the state’s authority to regulate fire insurance files;
  • Creating a Fraud Investigation Unit within the Department of Insurance and Finance; and
  • Prohibit auto insurance from using “non-driving” factors (eg, credit-based insurance coverage).

Michigan was the only state to offer unlimited medical coverage through the PIP portion of auto insurance. Insurers have also come under greater pressure to control medical expenses arising from PIP claims. The cost caused more than one in four (26 percent) drivers on Michigan roads to be uninsured in 2019, the Insurance Research Council (IRC) reports, nearly double the national rate (13 percent). Michigan is one of the 12 no-fault states in the US This system allows policyholders to file claims with their insurance in the event of an accident, regardless of who caused the accident. No-fault countries ban prosecutions for serious crimes and encourage prompt recovery.

Learn more:

IRC Releases State Auto Insurance Affordability Rankings

Why Personal Auto Insurance Rates Should Continue to Rise

Triple-I News at a Glance: Personal Insurance Rates

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