Michigan has some of the highest auto insurance costs in the country.
If you’re considering starting a Taxi or Non Emergency Medical Transportation (NEMT) business in Michigan, you should know that the cost of insurance in this state is some of the highest you will find.
Taxi regulations in Michigan are set by individual municipalities, but all taxi companies operating in the state must be licensed by the Michigan Department of Transportation (MDOT). Some of the regulations are indirect, such as having a vehicle that is safe to drive on the roads in Michigan. Another key factor is the commercial insurance requirements. In fact, commercial auto insurance is one of the most expensive cost components to operating a taxi service in most states, and especially in Michigan. Michigan has included in my most expensive states to insure any type of vehicle and especially taxis which typically operate at night.
The laws in Michigan also are a factor, and on a relative basis, are among the most favorable in the country to injured plaintiffs, and least favorable to insurance companies.
Another of the main reasons is the state’s unique no-fault insurance system, which requires all drivers to carry personal injury protection (PIP) coverage. PIP coverage pays for medical expenses and lost wages resulting from an accident, regardless of who is at fault. This system is intended to ensure that accident victims receive prompt medical care and financial assistance, but it also drives up the cost of insurance.
Another reason for high auto insurance rates in Michigan is the high number of uninsured drivers in the state. According to the Insurance Information Institute, Michigan has one of the highest rates of uninsured drivers in the country, which means that insurance companies have to spread the cost of accidents involving uninsured drivers among their policyholders. The rates of uninsured drivers vary widely depending on the area of the state. For example, Detroit has a super high rate of uninsured motorists, while the northern part and Upper Peninsula (the part connected to Wisconsin) has a relatively lower rate of uninsured drivers. I find it interesting, albeit not surprising that many businesses that operate in both Michigan’s Upper Peninsula and Wisconsin have their primary location in Wisconsin, a state with some of the lowest rates for auto insurance.
Additionally, the state has had a high number of auto theft and accidents which also contribute to the high rates.
Overall, the combination of the no-fault insurance system and a high number of uninsured drivers make auto insurance rates in Michigan more expensive than in many other states.
This includes undergoing background checks for all drivers, regular vehicle inspections, and maintaining liability insurance.
Additionally, all taxi companies must comply with federal regulations, such as the Americans with Disabilities Act, which requires that a certain percentage of their vehicles be wheelchair accessible. In short, the state’s regulatory environment drives up the cost, which causes some people to drive without insurance, which in turn drives up the cost for those that have insurance.
It is recommendable to check with the local municipalities or MDOT for specific regulations in the area where the taxi service will be operating.