Michigan rated worst state for auto insurance claims - MLive.com

Insurance premiums after a crash increase more for drivers in Michigan than any other state, according to an independent analysis of auto insurance rates.

The Great Lakes state is notorious for its already expensive car insurance, but a recent study found it is the worst state to file a property damage claim too. Consumer analysts from Insurance.com found Michigan drivers pay an average of $3,502 in insurance premiums after an at-fault accident, a 48% jump in cost.

There are other states which experience a larger increase in their insurance premium after an accident claim, but Michigan’s rates remain the highest in the nation. Consumer analyst Penny Gusner said the study compared insurance rates in 10 Michigan zip codes throughout the state, based on a property damage claim worth at least $2,000.

Why Michigan auto insurance costs so much, and how to lower it

Michigan has the highest auto-insurance premiums in the country. Here are the reasons why, and the various proposals to lower costs.

Michigan’s expensive auto insurance is attributed to its unique form of no-fault insurance, which causes the driver’s insurance company to pay for damages regardless of who caused a collision. Michigan passed a law this year allowing motorists to choose from five options for medical coverage, allowing them to opt out from unlimited lifetime personal injury protection.

The state requires motorists to have no-fault insurance, which covers damage to people and other people’s property, but residents have to purchase additional collision coverage to pay for the damage to their own vehicle. Michigan also has a mini-tort law on the books, which allows a motorist to sue the at-fault driver for up to $1,000 in damages.

Gusner said the premium hike after a crash should only last 3-5 years, depending on the insurance company, and could go down faster if the driver keeps a clean record.

Gusner said drivers also risk of losing a 20% to 30% good driver discount offered by some insurance companies, but some companies will handle minor claims without hiking premiums for the driver’s fist incident.

Michigan’s new legislation prohibits the use of several non-driving factors like gender, zip code and education in setting auto insurance rates. Gusner said basing rates on the driver’s safety record and experience would likely mean premiums would jump higher than 48% after a property damage claim.

“The claim could even be harsher, but then again hopefully all these reforms bring down your base rate,” she said.

Repair costs are another factor contributing to expensive insurance hikes after a crash. The Bureau of Labor Statistics found the price of motor vehicle repairs grew 66% since 2000.

One of the reasons for the jump is the increasing cost of body parts and safety features with expensive sensors and sensitive calibration requirements. A 2018 report by AAA found vehicles equipped with advanced driver assistance systems like automatic emergency braking, blind spot monitoring and lane departure warnings can cost twice as much to repair.

“The latest car models being rolled out cost more than ever to repair due to the expensive technology inside, such as sensors, cameras and electronic safety features that are pricey and difficult to replace,” Gusner said.

Gusner said motorists should see if they can find a more competitive rate after completing an insurance claim. Insurance.com data shows drivers can save an average of $600 by comparing rates after a crash.

In Michigan, drivers with a clean record pay an average of $2,582 for a State Farm policy, one of the three cheapest among insurers surveyed. Switching to the cheapest car insurance company after a claim could save drivers an average of $674.

“Just because you have something on your record doesn’t mean you can’t shop around and find lower rates," Gusner said.

Of course, the best advice is far more simple.

“Stay out of accidents,” Gusner said.

In compiling the rankings, Insurance.com researched how much drivers in each state pay, on average, after a car accident claim. Based on the data, Michigan is the worst state for car insurance claims, followed by Louisiana, California, Florida and Delaware.

The state where drivers pay the least after an at-fault accident, Maine, also has the lowest overall insurance rates in the nation at $884. Ohio, Virginia, Indiana and Idaho all have insurance rates that come in below $1,300, on average, after a collision.

Along with Michigan, other states with high insurance rates after accident claims include:

1. Michigan ($3,502)
2. Louisiana ($3,348)
3. California ($3,081)
4. Florida ($3,045)
5. Delaware ($2,592)
6. Rhode Island ($2,591)
7. Connecticut ($2,589)
8. Georgia ($2,552)
9. Minnesota ($2,503)
10. District of Columbia ($2,438)

The best states for auto accident claims include:

1. Maine ($1,058)
2. Ohio ($1,170)
3. Virginia ($1,250)
4. Indiana ($1,259)
5. Idaho ($1,294)
6. North Dakota ($1,338)
7. New York ($1,360)
8. Vermont ($1,405)
9. Hawaii ($1,414)
10. Alaska ($1,458)