Michigan's Annual Auto Insurance: A 12-Month Option

Yes, it is possible to purchase a 12-month auto insurance policy in Michigan. While auto insurance typically comes in six-month policies, some insurers offer 12-month policies that allow you to lock in your rate for a year. This can be beneficial as it prevents billing surprises and unexpected increases. However, not all insurance providers offer 12-month policies, so you may need to specifically request this option from your provider or shop around to find one that does. It's important to note that Michigan has specific requirements for auto insurance coverage, including Personal Injury Protection (PIP), Property Protection (PPI), and Residual Bodily Injury and Property Damage Liability (BI/PD). These coverages are mandatory for all vehicles in the state.

Pros and cons of 12-month vs. 6-month auto insurance policies

When choosing between a 6-month and a 12-month auto insurance policy, you should consider whether you prioritise flexibility or locked-in rates.

12-Month Auto Insurance Policy Pros

• Your car insurance rate will be locked in for the year, so you'll know what to expect each month.
• Annual policies can make budgeting simpler.
• You will have fewer renewal dates to remember.
• You may not need to requalify for discounts as often.

12-Month Auto Insurance Policy Cons

• Less policy flexibility — if you want to cancel but also avoid an early cancellation fee, you'll have to wait until your renewal date.
• Driving activity isn't re-evaluated as frequently, so surcharges for accidents and tickets are not removed as often.
• It may be harder to pay in full as you will be paying for the entire year's worth of insurance upfront.

6-Month Auto Insurance Policy Pros

• A bit more flexibility.
• Auto insurance companies revise rates at the end of the policy period, so the cost of your insurance coverage may decrease more quickly.
• Policy flexibility — if you are unhappy with your insurance carrier or have found a better option elsewhere, a six-month policy means you would not have to wait as long for your renewal period.
• Paying in full may be more accessible — it may not be possible to pay for a full year upfront, so choosing a six-month policy could make paying in full more accessible and allow you to qualify for a discount.

6-Month Auto Insurance Policy Cons

• More frequent premium recalculations — with a six-month policy that renews twice a year, you could see your premium fluctuate more frequently.
• Potential to forget renewal dates — you might be more likely to forget your renewal dates since they occur twice a year and could potentially miss a payment, causing a lapse in insurance coverage.
• Possible missed discounts — if you are benefiting from a discount that you will no longer qualify for when your policy term ends, a six-month policy could mean losing those savings sooner.

How to find a 12-month auto insurance policy in Michigan

A 12-month auto insurance policy covers you for a year, instead of the more common six-month policy. This means you can lock in your rate for a year, avoiding any unexpected increases. However, this also means that if you get a ticket or are in an accident, you could be paying a higher rate for longer.

Firstly, it is important to note that not all insurers offer 12-month policies, so you may need to shop around. You can start by contacting your current insurer and asking if they offer 12-month policies. If they don't, or if you don't currently have an insurance provider, you can try getting quotes from other companies.

Some companies that are known to offer 12-month policies include:

• Liberty Mutual
• The General
• Kemper Specialty

When getting quotes, be prepared to provide information such as your home address, driver's license number, vehicle identification number, and safety features of your car. You should also be aware of the minimum insurance requirements in Michigan, which are as follows:

• Personal Injury Protection (PIP): covers medical expenses, wage loss, and replacement services for up to three years after an accident.
• Property Protection (PPI): covers damage to other people's property in Michigan, up to $1 million.
• Residual Bodily Injury and Property Damage Liability (BI/PD): covers defense costs and damages if someone is killed or seriously injured in an accident, with minimum coverage of $20,000 per person, $40,000 per accident, and $10,000 for property damage in another state.

Advantages and disadvantages of a 12-month policy

As mentioned earlier, a 12-month policy has the advantage of locking in your rate for a year, avoiding unexpected increases. It can also result in a discount of around 9% if you pay upfront for the year.

However, there are also some disadvantages to consider. 12-month policies can be difficult to find and may not always result in lower rates. They are also less flexible, meaning you could be paying a higher rate for longer if you get into an accident. Additionally, with a six-month policy, your rates are recalculated more frequently, which can work in your favour if your circumstances change.

Additional considerations

When choosing an insurance policy, it is important to consider your specific needs and circumstances. Compare price quotes from different providers and take advantage of any discounts you may be eligible for, such as multi-vehicle or safe driver discounts. You should also make sure to choose a policy that meets the minimum coverage requirements in Michigan.

What auto insurance coverage must be purchased in Michigan

In Michigan, car insurance policies typically run on a six-month renewal cycle. However, some insurers offer 12-month policies, which can be beneficial for locking in a lower rate for a year. While 12-month policies are less common, they can be requested from the provider.

Now, let's discuss the auto insurance coverage that must be purchased in Michigan. Michigan is a no-fault insurance state, which means that if you get into a car accident, your insurance will reimburse you for medical expenses, wage losses, and funeral costs, regardless of who is at fault. Here are the types of auto insurance coverage that you must purchase in Michigan:

Personal Injury Protection (PIP)

PIP pays for all reasonable and necessary medical expenses for your lifetime if you are injured in a car accident. It also covers wage loss and replacement services for up to three years after the accident. PIP is a crucial part of a no-fault policy and is required for every vehicle in Michigan.

Property Protection Insurance (PPI)

PPI covers damage caused by your vehicle to other people's property in Michigan, such as buildings, fences, and other vehicles. The minimum requirement for PPI coverage is $1 million. This is another essential component of the no-fault policy and is mandatory for all vehicles.

Residual Bodily Injury and Property Damage Liability (BI/PD)

BI/PD covers your defense costs and any damages you are liable for if someone is killed or seriously injured in an accident. The minimum coverage limits required by law are $20,000 per person injured or killed, $40,000 per accident if multiple people are hurt or killed, and up to $10,000 for property damage in another state. These limits are often referred to as 20/40/10. You can choose to purchase higher limits of BI/PD coverage if needed.

In summary, these three components—Personal Injury Protection, Property Protection Insurance, and Residual Bodily Injury and Property Damage Liability—are the basic parts of a no-fault policy that must be purchased and carried on every vehicle in Michigan.

How to save money on auto insurance in Michigan

Auto insurance in Michigan is more expensive than in most other states, and even higher than the national average. However, there are ways to reduce costs. Here are some tips on how to save money on auto insurance in Michigan:

Ask for the Latest PIP Coverage Options

Due to recent changes in Michigan law, drivers can now opt for lower PIP coverage. This means that while your insurance company will charge you less, you may have to pay more out of pocket in the event of an accident.

Ask for Higher Deductibles

Insurance companies view drivers who opt for higher deductibles as more responsible, so asking for higher deductibles can lead to lower insurance premiums.

Get Low Mileage Discounts

If you don't drive your car often, or tend to carpool to work or school, you can ask for a low-mileage discount.

Maintain a Good Credit Score

Insurance companies may not admit it, but they do use credit scores to calculate insurance premiums. So, maintaining a good credit score can help lower your insurance rate.

Shop Around and Compare Rates

Getting quotes from different insurance companies and comparing them is a good way to find the most affordable rates. Using an independent insurance agency that works with multiple insurance companies can help you find the best prices.

Drop Collision/Comprehensive Insurance on Older Cars

Collision and comprehensive insurance can be expensive for older cars, so it may be more cost-effective to drop this extra coverage if your car is old.

Get Group Insurance

If you're part of an alumni, business, or professional group, you may be able to get a discount on your insurance. You can also ask your employer to add you to any group or club that offers discounted insurance.

Take a Defensive Driving Course

Completing a defensive driving course can lead to lower insurance rates, as it puts you in the category of a safe and responsible driver.

Club Your Insurances

If you need multiple types of insurance (e.g., home, renters), try to buy them from the same company. This will make you a more important and loyal customer, which often leads to lower insurance rates.

Add Your Family Members to Your Policy

Adding your spouse and children to your insurance policy can lower your insurance rates as a family.

Consumer protections in Michigan's new auto insurance law

Michigan's new auto insurance law, which came into effect on July 1, 2020, offers several consumer protections. Here are some key provisions:

Lower Costs and Increased Coverage Options

The new law is designed to lower costs for Michigan drivers and provide them with more coverage options. This includes the introduction of a tiered system for Personal Injury Protection (PIP) coverage, allowing drivers to choose a level that suits their needs and budget. Drivers can now opt for coverage limits of $50,000, $250,000, or $500,000, or they can choose the "No-Limit" option.

Elimination of Certain Non-Driving Factors

The law prohibits auto insurance companies from using non-driving-related factors such as sex, marital status, homeownership, credit score, educational level, occupation, and zip codes when setting insurance rates. This ensures that a driver's rate is based solely on relevant driving factors.

Fraud Investigation Unit

A new unit has been established to investigate criminal and fraudulent activity related to insurance and financial markets, working closely with the Attorney General and law enforcement to prosecute these crimes. This helps to protect consumers from fraudulent activities that drive up insurance premiums.

Elimination of Penalties for Lapse in Coverage

The new law eliminates penalties for drivers who have gone without auto insurance for a period. Previously, insurance companies could charge a reinstatement fee or increase premiums for eligible drivers who had a lapse in coverage. Now, insurers cannot limit coverage or charge higher rates solely due to a lapse, as long as the driver applies for insurance before the amnesty period ends on January 1, 2022.

Prior Approval Required

Auto insurance rates and policies must now be filed with and approved by the Department of Insurance and Financial Services before being offered to consumers. This ensures that consumers are presented with fair and approved rates and policies.

Increased Fines and Penalties

The new law allows for increased fines and penalties on insurance companies, agencies, and licensed agents who violate certain provisions of the law. This acts as a deterrent and encourages compliance with the consumer protection measures.

Residual Bodily Injury (BI) Coverage Increase

The minimum BI coverage limit that insurance companies are required to offer has been increased, providing additional protection for Michigan drivers from claims by other injured persons.

Mini-Tort Increase

The law increases the amount of money that can be recovered in small claims court for uninsured damages, providing further protection for consumers who may be involved in uninsured motorist incidents.

These consumer protection measures within Michigan's new auto insurance law aim to provide drivers with more choices, lower costs, and enhanced coverage options while also strengthening oversight and reducing fraudulent activities within the industry.

Frequently asked questions