Some Say Michigan’s No-Fault Reform Lowered Premiums — but at What Cost?

In 2019, Michigan passed a no-fault auto insurance reform law, primarily to lower Michiganders’ insurance rates, according to the state’s Department of Insurance and Financial Services.

Five years later, one study said it did: A Milliman analysis found that the average personal auto insurance premium in Michigan fell by $357, or 18.8%.

The report, which was commissioned by the state legislature, focused on private passenger vehicles including cars, trucks, SUVs and vans, and also “highlighted how the reform… reduced the number of uninsured drivers,” according to a press release by the same state Department.

But a closer look at the report itself reveals that in fact, the average Michigan auto insurance premium in 2024 was higher than the year the law was implemented — and that the rate of uninsured drivers actually increased as well.

So did the no-fault reform actually make anything better?

Is no-fault car insurance actually better?

No-fault auto insurance, writ large, requires claimants’ insurance companies to pay out for their damages, regardless of whether or not they were at fault in an accident. So for example, if you rear-end someone — frequently an accident in which the tailing driver is considered at fault — your own insurance company would still pay the medical bills related to your neck stiffness, no matter what.

Michigan’s initial no-fault law actually went into effect all the way back in 1973. The 2019 reform specifically focused on PIP, or Personal Injury Protection, insurance. Before the law was implemented in 2020, all Michigan drivers were required to purchase unlimited PIP coverage — which made premiums expensive. The reform allowed Michiganders to choose lower coverage limits, or even to opt out if covered by another insurance product like health insurance (including Medicare).

While the report does show that premiums dropped year-over-year from 2019 to 2022 — and specifically highlights that “the average premium for PIP coverage decreased by $369 per insured vehicle” — the state’s NPR affiliate alleges that “the report relied on a series of assumptions about what would have happened to insurance rates if the 2019 auto no-fault law hadn't been enacted” in order to arrive at its savings figure.

The same article claims that Consumer Federation of America car insurance expert Doug Heller called the press release a form of gaslighting.

“People in Michigan know the truth,” he is quoted: “They see it in their pocketbooks,” said Heller.

"It looks like the state is either trying to protect the interests of the insurance companies, or embarrassed and trying to cover up its own failure to achieve the reforms that were promised."

Finding a great rate — whether you’re in an at-fault or no-fault state

The availability of no-fault car insurance varies by state. In 12 states, no-fault coverage is the legal default: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah.

In another 10 states, along with the District of Columbia, no-fault coverage can be optionally added onto an auto insurance policy. Those states are: Arkansas, Delaware, Maryland, New Hampshire, Oregon, South Dakota, Texas, Virginia, Washington and Wisconsin.

No-fault insurance can make for more expensive premiums, since insurance companies have to pay out claims more often — instead of only when their customers are found at fault. Some studies have also found that no-fault states, where drivers may be less conscientious of the financial consequences of their actions, have higher numbers of traffic deaths.

On the other end of the spectrum, though, no-fault proponents say it allows for quicker payouts and fewer lawsuits.

Check with your auto insurance provider if no-fault insurance is available to you — and whether or not it is, consider upgrading to full car insurance coverage (with both collision and comprehensive coverages). While premiums have been on the rise and many drivers have been scrambling to lower them, being liable for thousands of dollars in damages could be catastrophic to your budget — even in an accident that’s not your fault.