Car insurance is expensive in Michigan. In fact, in a recent study by the insurance industry, despite all the changes to the Michigan no-fault law, Michigan still has one of the most expensive insurance rates in the country. However, as costly as auto insurance is in Michigan, it is even more so in Detroit, but there are always ways to save money and find cheaper car insurance. This article by the Lee Steinberg Law Firm explores why car insurance is so expensive in Detroit and how to find more affordable auto insurance.
Why is Car Insurance So Expensive in Detroit?
Detroit has some of the highest car insurance rates anywhere. The reasons for this vary and are controversial. Although auto insurance companies are not supposed to consider zip codes and similar factors when pricing auto insurance (this is called redlining), they get around these rules in other ways. For example, carriers such as State Farm and Allstate will look at an applicant’s credit score to assess how much they will charge for auto insurance.
Another reason for Detroit’s high car insurance rates is that car theft and vandalism are higher in the city than in other areas of Michigan. Insurance is nothing more than an assessment of risk. If something is riskier, an insurance company will charge a higher premium to insure it.
Michigan car insurance policies also offer no-fault benefits. These benefits are available to individuals listed in the policy and even family members. They kick in when someone is injured in a Detroit car accident. These benefits are extensive and include:
- Medical bills for doctor visits, hospital stays, rehabilitation, physical therapy, and other medical expenses
- Lost Wages – the payment of 85% of your gross wages for up to 3 years
- Replacement Services – the payment of $20 per day for individuals who have to complete the household chores the injured person can no longer complete because of their car accident injuries
- Attendant Care – nursing care by friends, family, or a professional service for more critically injured individuals. Attendant care is paid at an hourly rate by the auto insurance company. The amount is negotiable.
In addition, Detroit has a higher rate of car crashes and truck collisions. Because of the city’s higher traffic level, Detroit naturally has more accidents. This increases the insurance company’s risk, which leads to higher premiums.
Skyrocketing Costs of Replacement Parts and Vehicle Repair
Another reason for the huge increase in auto insurance in Detroit and throughout Michigan is the skyrocketing costs of vehicle repairs, parts, and new cars since the Pandemic. The cost of replacement parts and materials has surpassed inflation. Vehicles now use more chips and electronic sensors, which increases the repair cost. In addition, over the past few years, there has been a shortage of talented technicians and repairmen. This has drastically increased the labor costs for repair shops, which are passed down to consumers.
What is also interesting is the increase in costs associated with EVs. While EVs represent less than 3% of all repairable claims, EV repairs remain much more expensive than non-EVs. In fact, on average, EV repairs cost 47% more than non-EV counterparts.
Detroit Has Lots of Potholes and Poor Road Conditions
Another reason for the high cost of auto insurance in Detroit is the poor road conditions. Although many major city streets, such as Woodward Ave., Gratiot Ave., I75, and Grand River Ave., have had repair projects over the last few years, most of the neighborhood streets are in horrible condition.
Michigan has harsh winters with lots of freezing and thawing. This cycle wreaks havoc with concrete and Michigan roadways, causing huge potholes and dangerous road and highway conditions. Naturally, these potholes lead to more car accidents, crashes, and claims.
But there are ways to save money on car insurance, even in Detroit.
#1 – Shop Around
It is important to shop around for car insurance. Not all auto insurance is the same. It is not like gasoline or flour. Insurance is a financial product with different choices. It is essential to ask other agents what they offer and the cost for each coverage.
Certain insurance coverages are mandatory in Michigan. These include bodily injury coverage (which covers you if you are negligent in causing injuries), personal injury protection (PIP—which covers your medical expenses, lost wages, and other benefits), and property damage insurance (which covers you if your vehicle causes property damage).
The minimum bodily injury coverage is $50,000 per person or $100,000 per accident. But this is just the minimum, and having more insurance than this makes sense if you have assets to protect.
PIP coverage is also important because it covers medical expenses from a wreck that health insurance doesn’t. Many plans, such as Medicare, Medicaid, and private health plans, don’t cover auto accidents.
#2 – Look for Independent Agents
Some insurance companies have captive agents. For example, State Farm agents only sell State Farm policies. This is also true for Farm Bureau. Shopping this way for car insurance has never made sense to me. Would you shop at a grocery store selling only one brand of bread or milk? No. You would want to compare different choices based on price and quality. The same should go for auto insurance.
Independent agents can compare different auto insurance company prices. They can give you multiple quotes from different carriers. This way, you can make an intelligent, more informed car insurance buying decision.
#3 – Drive Safer
Driving safer is the right thing to do, but it also saves money. The safer a driver is, the less risk you are to an insurance company over time. A good driving record will get you cheaper rates. This includes not having speeding tickets, traffic tickets, or Detroit car crashes.
#4 – Ask For Discount Options
Most insurance companies now offer discounts for purchasing multiple insurance products. For example, bundling car and homeowners’ insurance often leads to a discount. Ask if the insurance company will provide this. Also, ask the agent what other discounts they have. Some may include discounts for military service, law enforcement, education, and other professions. Carriers sometimes even offer discounts to alumni of different colleges and universities.
What are the Penalties for Not Affording Car Insurance in Detroit?
Paying for car insurance in Detroit is not easy. But it is the law. Failing to maintain auto insurance can lead to expensive tickets, fines, and other civil penalties. In addition, if something horrible happens and another person causes a crash, you may be unable to get compensation. Under Michigan law, a person operating an uninsured vehicle cannot get no-fault benefits or even pain and suffering compensation from the at-fault driver. In fact, you can’t even get your vehicle repaired or fixed, even if the other car caused the collision!
The penalties for driving without insurance in Detroit are very severe. That is why it is best to insure your car as soon as possible.
Call the Detroit Car Crash Accident Lawyers
If you have any questions about buying auto insurance in Detroit or anywhere in Michigan, call the Detroit car accident lawyers who have been helping auto accident injury victims in Detroit for over 50 years.
Our Detroit car accident lawyers have recovered hundreds of millions for our clients. We know how to get the most money after the severe and life-changing injuries caused by a Detroit car accident.
Call us at 1-800-LEE-FREE for a free consultation, or complete a contact form today. We never charge anything until we win your case.