Michigan Drivers Saddled With Most Expensive Car Insurance in the Country

Injury coverage for Michiganders pushes cost burden to the highest in the nation.

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Whether you drive an old Ford Mustang or brand-new Toyota Prius, if you live in Michigan, be prepared to fork over a hefty chunk—the highest in the nation, in fact—of your annual income to car insurance.

Residents of the state that propelled the American auto industry to the international stage face the steepest cost burden when it comes to car insurance, according to new research from CarInsuranceQuotes.com, spending a staggering 8 percent of their annual income to insure their vehicles.

"Geography plays a huge role in how much you pay for car insurance," says John Egan, managing editor of CarInsuranceQuotes.com. "There are so many different regulations and the make-up of a population center, for instance, can impact that as well."

Most states require drivers to have some amount of insurance coverage for their vehicles, which is regulated at the state level. A big reason why car insurance in Michigan is so pricey has to do with the personal injury coverage drivers are required to have. Michigan is the only state that guarantees unlimited lifetime medical and rehabilitation benefits for treatment of any car accident injuries, no matter who is at fault.

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"If you are paralyzed in a car accident and you need extensive medical care over the rest of your life, under Michigan law as it stands now, that gets paid for by your car insurance company," Egan says. "That drives up the cost for everybody."

Here's a look at the top 5 most and least expensive states for car insurance:

State
Median price of annual car insurance policy
% of income paid for car insurance
1. Michigan
$4,490
8.0
2. Louisiana
$2,912
5.5
3. Kentucky
$2,292
4.5
4. West Virginia
$2,074
4.2
5. Mississippi
$1,840
4.0
51. Massachusetts
$1,128
1.4
50. North Carolina
$860
1.6
49. Hawaii
$1,244
1.6
48. Alaska
$1,348
1.7
47. Oregon
$1,108
1.9

Source: CarInsuranceQuotes.com

A host of other factors go into determining how much drivers pay for their insurance besides state laws and regulations, including everything from how densely populated a certain region is to how many speeding tickets a driver has.

Places such as Alaska and Hawaii have fewer residents and fewer people on the road, so they have fewer accidents, Egan says. The fact that fewer claims are filed from those states figures in to how insurance companies calculate rates.

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The reverse is true in Louisiana. Vehicle owners there pay fairly high car insurance rates, about 5.5 of their annual income, but they also file a hefty number of injury claims, according to Egan. The expectation of more injury claims filters into everyone's car insurance rate, resulting in higher premiums in the state.

"What you pay can be different depending on where you park your car," Egan says. "You're being lumped into whatever the claim experience is for that region, and whatever the accident rates is."

Egan says there are some easy things consumers can do to lessen the burden, including just simply shopping around. The insurance industry is very competitive and exploring your options can save you money.

Egan also suggests asking your insurance company if any discounts are available or whether bundling your renters' or homeowners' insurance with your car insurance could get you a break on your bill.

Meg Handley is a business reporter for U.S. News & World Report. You can reach her at mhandley@usnews.com and follow her on Twitter.