Residents of Michigan – the “Great Lakes State” and home of “Motor City” (Detroit) – are required by law to carry auto insurance. High risk drivers who can’t find coverage in the voluntary insurance market can turn to Michigan’s Automobile Insurance Placement Facility. This organization ensures that high risk drivers do find insurance, albeit at much higher rates than policies in the voluntary market. If you have to use MAIPF as a last resort, you’d be wise to improve your driving record ASAP in order to go back to the regular market for lower car insurance rates in Michigan.
What is the Michigan Automobile Insurance Plan Facility (MAIPF)?
According to Michigan’s Department of Insurance, MAIPF is “an organization designed to provide auto insurance to any qualified person who is unable to get insurance in the regular market.” While they may decline to underwrite you, all companies writing auto insurance in Michigan must cover high risk drivers ultimately. You can call any licensed insurance agent in Michigan, and they can advise you whether MAIPF rates would be lower than other options, like finding a non-standard insurance company that specializes in people with “less-than-perfect” driving records.
High risk drivers in Michigan are allotted to insurance companies based on each company’s overall market share in Michigan. Through MAIPF, you may request a specific company as your insurance provider, and MAIPF will try to match your preference. However, each insurance company has a maximum number of high risk drivers it must cover. If you happen to exceed the threshold for your preferred company, you may be assigned to a different company.
Unlike some states, Michigan does not require you to certify that you’ve tried and failed to get an auto insurance quote through the voluntary market.
As long as you (1) have a car registered (or about to be registered) in Michigan, and (2) hold a valid driver’s license, you can apply for insurance through MAIPF. MAIPF can turn you down if:
- Your driver’s license is suspended or revoked. If you are eligible to get your license restored by filing a proof of financial responsibility, then you can apply through MAIPF.
- You have had an auto insurance policy cancelled within the last 2 years because you didn’t pay a premium. Even then, MAIPF may still offer to insure you if you pay in advance a premium amount that they determine for the policy you want.
- Within the past 5 years, you have been convicted of trying to defraud an insurance company.
- Within the past 3 years, you have been found guilty of a felony with a motor vehicle, driving under the influence of alcohol or drugs, failing to stop at the scene of an accident, or reckless driving.
- Your car does not meet Michigan safety requirements.
Once you are assigned an insurer, you will be covered for at least six months, although most policies last one year. Each year your policy automatically renews. If, during that time, you find an insurer in the voluntary market, you can cancel your policy through MAIPF without penalty. Write a letter to your insurer cancelling the policy, and your premiums will be reimbursed on a prorated basis. Another possibility is that your current MAIPF insurer could rewrite your policy in the voluntary market at the end of the policy term. For example, if State Farm is your assigned insurer, and you have been evaluated as a safer driver, then State Farm could underwrite you outside of the high risk program.
Because high risk drivers tend to cost more to insure, rates for those who enter the residual pool through MAIPF tend to be significantly higher than the same coverage in the voluntary market. Given that Michigan has some of the highest average auto insurance rates in the voluntary market to begin with, expect your high risk rates to pinch.
MAIPF offers high risk drivers the same mandatory coverages as those normally found in the voluntary market. These include:
|Michigan Minimum and MAIPF Limits|
|Bodily Injury (BI)||$20,000 per person/$40,000 per accident|
|Property Damage (PD)||10,000|
|Personal Injury Protection (PIP)||Unlimited*|
According to Michigan’s Department of Insurance and Financial Services, Michigan is the ONLY state that offers “unlimited medical and rehabilitation benefits". It provides wage loss benefits for up to three years, and $20 per day for replacement services if you are injured in an auto accident, regardless of fault.” This is the most generous personal injury protection in the U.S. After a $300 deductible, other PIP expenses should be covered.
Michigan coordinates coverage of medical expenses with other medical insurance providers you may have, excluding Medicare, Medicaid and Medicare supplement. So if you have health insurance, tell your auto insurer so that your PIP premium may be lowered. Some health care plans exclude coverage for injuries due to auto accidents, so this is a situation where you have to read the fine print to ensure you are covered.
The optional coverages available through the voluntary market are also offered through MAIPF.
|Optional coverages through MAIPF|
|Limited Property Damage Liability||Max of $1,000|
|Uninsured Motorist Coverage||$20,000 per person/$40,000 per accident|
|Comprehensive||Varies by insurer|
|Limited Collision||Varies by insurer|
|Regular Collision||Varies by insurer|
According to the Insurance Information Institute, some 21% of Michigan drivers were uninsured in 2012. That’s almost twice the national average. Consider that when selecting your coverage options - it may be beneficial to consider adding on uninsured motorist coverage after factoring in the extra premium.
If you choose the comprehensive or collision coverage, you must present your vehicle to the insurer for inspection. If you don’t, your policy will be written without these coverages. Coverage limits for comprehensive and collision insurance for high risk drivers vary by insurer. There are no state mandated limits, so shop around and see what is offered.
MAIPF Rates, Premiums and Payments
In Michigan, premiums are set based on multiple factors including your age, make and model of your vehicle, miles driven, driver record, income, and where you live. The Facility determines base rates for drivers by taking the weighted average of the base rates of the five largest insurers in Michigan’s voluntary market. MAIPF rates tend to be higher than rates in the voluntary market because its base rates do not include discounts for which you may be qualified.
Regardless of which insurer you are assigned to, you will be charged the same rates. After you enroll in MAIPF, you must pay an initial deposit of $100 or 40% of your total premium, whichever is greater.
If your payment history includes instances of nonpayment of your insurance premium, you may have to pay 100% of your premium up front. If you are unable to pay the entire premium in advance, you must pay at least 25% of your total premium in advance or $100, whichever is greater. If your payment history is clean, you can choose to pay in installments. This means paying 40% of the premium up front, and the remainder in 20% increments over the next 3 months.
How to Get Insurance through MAIPF
Contact any licensed auto insurance agent in Michigan, and they will walk you through the application process.
For more information on Michigan’s Auto Insurance Plan Facility, visit their website here: http://www.maipf.org/ or call the Michigan Department of Insurance and Financial Services at 877- 999-6442.