Why Michigan Car Insurance Costs So Much, and How the PIP Choice System Works
Part of our guide to minimum car insurance by state.
Michigan's auto insurance is built differently from almost every other state's. Your own policy pays your medical bills after a crash through personal injury protection (PIP), and until the state's reform, drivers had no choice about how much of it to buy. Now you pick from six PIP medical levels, and the one you pick is the biggest lever you control. Here is what each level means, who can choose the lower ones, and what you take on if you do.
Key takeaways
- Michigan offers six PIP medical levels: unlimited, $500,000, $250,000, $250,000 with exclusions, $50,000 (Medicaid enrollees), and an opt-out for Medicare Parts A and B enrollees. Unlimited is the default if you do not choose.
- The law required insurers to cut average PIP medical premiums per vehicle for eight years: at least 45% for the $50,000 option down to at least 10% for unlimited.
- Default bodily injury liability is 250/500. The lowest you may buy is 50/100.
- About 19.6% of Michigan drivers were uninsured in 2022, the fifth-highest rate in the country, according to Insurance Research Council estimates published by Triple-I.
Why is Michigan car insurance so expensive?
Three features of Michigan's system push costs up, and each one shows up in the state's own rules.
Unlimited medical coverage is the default. DIFS says that "if a PIP medical option is not chosen by the insured, the unlimited PIP medical option is selected by default." Insurers must fund that promise for any driver who does not pick a lower level.
The catastrophic claims fee. The Michigan Catastrophic Claims Association (MCCA) reimburses insurers for PIP medical claims above a set amount, funded by a per-vehicle assessment. DIFS says drivers who keep unlimited PIP pay the assessment for both anticipated claims and any deficit, while drivers who choose a lower level pay only the deficit portion.
High liability defaults and many uninsured drivers. Michigan's default bodily injury limits are $250,000 per person and $500,000 per accident, far above most states' minimums. And according to Insurance Research Council estimates published by Triple-I, 19.6% of Michigan motorists were uninsured in 2022, ranking fifth nationally, against a countrywide rate of 14.0%.
Triple-I also notes a general pattern in no-fault states: where PIP benefits are generous, they can become a target for fraud, which pushes costs up. That observation is about no-fault systems broadly, not a Michigan-specific finding.
What are Michigan's PIP choices?
DIFS lists six PIP medical coverage levels, each "the most a driver's auto insurance company will pay per person per accident for an injured person's expenses under PIP medical coverage."
| Option | PIP medical limit | Who can choose it | Minimum average premium reduction per vehicle |
|---|---|---|---|
| 1 | Unlimited | Anyone (default) | 10% |
| 2 | $500,000 | Anyone | 20% |
| 3 | $250,000 | Anyone | 35% |
| 4 | $250,000 with exclusions | Named insured with non-Medicare qualified health coverage, and household members with health insurance that covers auto injuries | Not separately listed |
| 5 | $50,000 | Named insured enrolled in Medicaid, if household members have other auto, Medicaid or health coverage for auto injuries | 45% |
| 6 | Opt out of PIP medical | Named insured with Medicare Parts A and B, if household members have other auto or health coverage for auto injuries | Entire PIP medical portion removed |
The reductions apply to statewide average PIP medical premiums for policies issued or renewed after July 1, 2020, and insurers had to maintain them for eight years, according to DIFS. Your own premium depends on your circumstances.
Who qualifies for the lower PIP options?
The two lowest options depend on public health coverage, and option 4 depends on private health coverage that does not exclude auto injuries.
- Opt-out (option 6): the named insured must have Medicare Parts A and B, and everyone else in the household must have other auto or health coverage that covers auto accident injuries. DIFS says Medicare will pay for Medicare-covered services to enrollees who opt out, are injured in a crash and have no other coverage.
- $50,000 (option 5): the named insured must be enrolled in Medicaid, and spouse and resident relatives must have qualified health coverage, Medicaid, or PIP under another auto policy.
- $250,000 with exclusions (option 4): excluded people need qualified health coverage that is not Medicare. DIFS says drivers may need a statement that the health policy does not exclude or limit auto accident injuries and has an individual deductible of less than $6,579.
If you choose an option you do not qualify for, or do not provide the documentation, DIFS says your policy will be issued at the default unlimited level and you will be charged for it.
Lower PIP means a dollar cap, not fewer services. DIFS explains that choosing a lower level "would not affect what products, services, and accommodations are covered," but there will be a limit. If you choose $250,000, "you may be personally responsible for any bills that exceed" it.
What are the risks of choosing a lower PIP level?
The risk is a serious injury whose costs pass your limit. Under unlimited PIP, your insurer keeps paying. Under a capped option, the excess becomes your health insurer's problem, if it covers auto injuries, or yours.
Two other points from DIFS:
- If you exclude PIP medical based on health coverage and then lose that coverage, DIFS warns that after 30 days without qualified health coverage or PIP medical coverage, you are not entitled to any PIP medical benefits.
- Household members matter. Several options require every resident relative to have their own qualifying coverage, so check each person, not just yourself.
PIP is only one way to pay medical bills after a crash. How it compares to medical payments coverage in other states is covered in MedPay vs PIP.
What other coverage does Michigan require?
Liability (BI/PD). Default limits are $250,000 per person, $500,000 per accident and $10,000 for property damage in another state. The lowest you may buy is $50,000 / $100,000 / $10,000. DIFS warns that if costs exceed your chosen limit, "you will be required to pay any amount over the limit you choose."
Mini-tort. If you are 50% or more at fault, DIFS says you can be sued for up to $3,000 in damage to the other vehicle not otherwise covered by insurance. Optional limited property damage coverage protects you against that amount.
Michigan is one of twelve true no-fault states, according to Triple-I, and it uses a verbal threshold for lawsuits. See where it fits with the others in the no-fault states list.
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FAQ
Is unlimited PIP still available in Michigan? Yes. It is option 1 and the default if you do not choose another level.
Can anyone opt out of PIP medical in Michigan? No. DIFS limits the opt-out to named insureds with Medicare Parts A and B whose household members have other qualifying coverage.
What is the lowest liability coverage I can buy in Michigan? $50,000 per person, $100,000 per accident and $10,000 for property damage in another state. Without a selection, your policy carries 250/500/10.
Why do I pay an MCCA fee? The MCCA reimburses insurers for large PIP medical claims. Drivers with unlimited PIP pay the full assessment; drivers with lower PIP pay only the deficit portion, per DIFS.
What is mini-tort? A claim of up to $3,000 against a driver 50% or more at fault, for vehicle damage not covered by insurance.
Sources
- Michigan DIFS, "Choosing PIP Medical Coverage," https://www.michigan.gov/autoinsurance/choosing-coverage/choosing-pip-med-coverage (accessed October 1, 2026)
- Michigan DIFS, "Frequently Asked Questions," https://www.michigan.gov/autoinsurance/frequently-asked-questions (accessed October 1, 2026)
- Insurance Information Institute, "Background on: Compulsory Auto/Uninsured Motorists," https://www.iii.org/article/background-on-compulsory-auto-uninsured-motorists (accessed October 1, 2026)
- Insurance Information Institute, "Background on: No-fault auto insurance," https://www.iii.org/article/background-on-no-fault-auto-insurance (accessed October 1, 2026)
This guide summarizes Michigan DIFS guidance as of October 1, 2026. It is not legal, medical or financial advice. Confirm your eligibility for any PIP option with your insurer or agent.