Michigan High-Risk Auto Insurance Explained

Whether you drive to work in Motown, trek up to your lake house in Petoskey, or head to Lansing for school, it’s always important to abide by the rules of the road and carry the minimum legal coverage on your Michigan auto insurance policy. Those who fail to comply with the auto insurance laws in the state or any other traffic laws may be deemed high-risk drivers and struggle to find a policy that meets their needs.

Those with a history of poor decision-making behind the wheel may require a high-risk auto insurance policy. Let’s take a look at what a high-risk auto insurance policy entails in the Great Lakes State, who needs one, and how to find one. 

High-risk car insurance in Michigan isn’t actually a type of coverage or an auto insurance policy but rather a category a driver is placed in by insurers. A driver may be considered high-risk for several reasons; both driving and non-driving factors contribute to this categorization. Those needing high-risk car insurance may have a poor driving record, but drivers with poor credit or who have been the victim of several accidents may also require it.

When insurers bind a new policy, they assess a driver’s risk to determine their premiums. The higher the risk of a driver filing a claim, the higher their premium will be. While insurers use driving factors like one’s driving record to determine a driver’s rates, they also use non-driving factors like a driver’s gender, age, ZIP code, or several other factors that help them understand a policyholder’s risk level. 

For example, city drivers are far more likely to get into an accident and file a claim with their insurance. For this reason, drivers in densely populated ZIP codes often pay higher premiums, even if they’ve never been in an accident.

While non-driving factors are used to set rates, driving factors contribute to one’s rates significantly more than non-driving factors. In Michigan, those who have previously been caught driving without insurance, gotten a DUI, or committed several traffic violations may require high-risk insurance. Typically, those who have had their license or registration suspended, resulting in filing for an SR-22, are the most likely to need high-risk insurance.

Getting caught driving without the legal minimum amount of coverage required in the state is one of the biggest reasons insurers place drivers into a high-risk category. In Michigan, drivers must have at least $50,000 in bodily injury liability per person, $100,000 in bodily injury liability per accident, and $10,000 in property damage liability per accident, otherwise noted as 50/100/10 liability coverage.

Since Michigan is a no-fault state, drivers must also carry about $250,000 in personal injury protection (PIP) and up to $1 million in property protection insurance (PPI). Drivers who lease or finance their vehicles may also be required to carry collision and comprehensive coverage as part of their legally binding contract. 

Failing to carry the minimum legal coverage is illegal in the Great Lakes, and those who break this law may face penalties like fines, license or registration suspension, or even jail time. Also, breaking this law makes it much harder to get an auto insurance policy, as many insurers will refuse to bind with those with a history of driving uninsured. 

One form of short-term insurance in Michigan for high-risk drivers is the auto insurance pool, or the Michigan Automobile Insurance Placement Facility (MAIPF). This system allows drivers who cannot find a policy on the voluntary market to be entered into a pool and assigned an insurer at random. 

The voluntary market is where most drivers find their policies; it’s a term that encapsulates one’s agency in the decision to bind or not to bind with a particular insurer. However, some high-risk drivers don’t have that option because the standard and non-standard insurers in the voluntary market may reject high-risk drivers as policyholders. 

The MAIPF is a last resort for high-risk drivers who can’t bind a policy with a standard or non-standard insurer. Auto insurance pools are typically the most costly option for a policy, so drivers should exhaust all their other options before resorting to the MAIPF.

Cheap auto insurance for high-risk drivers in Michigan will likely come from a standard insurer that offers low base rates and plenty of discounts. The average full coverage premium in the state is about $2,190 annually, or about $1,095 annually for a minimum coverage one. High-risk drivers may expect to pay double or triple the average cost of the type of policy they desire. In the interest of savings, drivers with poor driving records may want to bind a minimum coverage policy to keep their premiums low. 

All drivers in the Great Lakes State must have a policy that at least meets the minimum legal requirements. While a minimum coverage policy will always be the cheapest policy in the state, it may not be the best for every driver’s needs. Those who prefer a bit more coverage may be more comfortable with a full coverage policy with additional, optional coverages like collision coverage, comprehensive coverage, uninsured motorist coverage (UM), or even GAP coverage. 

While a full coverage policy will be expensive for a high-risk driver, it’s often the safest option, as it provides a great balance of coverage for any accident scenario. If high-risk drivers can get a policy through a standard insurer, they may be eligible for discounts to lower their premiums. Discounts are a great way for drivers to lower their premiums without sacrificing their coverage for savings.

Many standard insurers offer a range of criteria-based and enrollment-based discounts they can stack on their policy to reduce their premiums. Some companies offer criteria-based discounts for bundling home and auto insurance, insuring multiple cars on one policy, or having anti-theft safety features on your vehicle. 

Insurers may also offer enrollment-based discounts, which require drivers to participate in a class or a program to receive a discount on their premiums. Some insurers offer a good driver discount for those who pass a course through the insurer. Similarly, others may offer a usage-based discount that requires drivers to use a telematics device to track and share their driving data with their insurer. Those who use a telematics device will receive a safe driving score based on their choices behind the wheel, translating into a discount on their premiums. 

If you need high-risk insurance, the best way to start your search is by getting and comparing quotes online. Lucky for you, quotes are our specialty here at Clovered. You can use our free quoting tool here to compare rates from the state’s top insurers to ensure you’re getting the right policy for your needs and budget. If you prefer to speak with an agent about your quote or any other questions about high-risk insurance, contact us at 833-255-4117 or [email protected].