OWI and Car Insurance in Michigan

Michigan law lets insurers charge more after an OWI and, for three years, lets them decline to insure the driver. Every auto insurer must have a merit rating plan that surcharges premiums based on Vehicle Code convictions, which include OWI, and a person convicted of OWI in the past 3 years falls outside the "eligible person" protections that normally limit refusals to insure.^[1][2] The statutes do not set the size of the increase, and this page does not predict rates.

Surcharges: the merit rating plan

MCL 500.2111(3) requires each insurer to set up a "secondary or merit rating plan." The plan must provide premium surcharges for all coverages other than comprehensive, based on substantially at-fault accidents and on convictions for violations of chapter VI of the Vehicle Code, which runs from MCL 257.601 to 257.750 and includes the OWI statute.^[1]

The statute limits how long an insurer may merit-rate a civil infraction: no longer than the Secretary of State carries points for it.^[6] That sentence speaks only of civil infractions, and OWI is a misdemeanor, not a civil infraction.^[6][7]

SOS points are not insurance points. The Secretary of State says its point system is separate from the points an insurance company assigns to set a rate.^[8] See points on your driving record.

The 3-year "eligible person" rule

Michigan's Essential Insurance Act protects "eligible persons." An insurer may not refuse to insure, refuse to continue to insure, or limit coverage for an eligible person except under underwriting rules that the statute allows.^[2] The definition of "eligible person" leaves out several groups relevant after an OWI:

• A person convicted under section 625 of the Vehicle Code during the immediately preceding 3-year period.^[2]
• A person whose license is under suspension or revocation.^[9]
• A person whose driving record for the preceding 3 years has more than 6 "insurance eligibility points."^[9]

Underwriting rules may be based on criteria identical to those standards.^[2] So for 3 years after an OWI conviction, the statute's protection against being refused or nonrenewed does not apply to that driver.^[2]

That does not mean every insurer will refuse. The statute expressly does not prohibit an insurer from insuring people who are not eligible persons.^[3] Each insurer must put its underwriting rules in writing and apply them uniformly across the state.^[3] An insurer may have different rules for new applicants and renewals only for people who are not eligible persons.^[10] Whether a given insurer keeps or takes a driver with a recent OWI depends on its written rules.

Cancellation in the middle of a policy

Cancelling a policy during its term is restricted more tightly than declining to renew. After an auto liability policy has been in effect 55 days, or immediately for a renewal, the insurer may cancel only because:^[4]

1. the risk was unacceptable during the first 55 days after the policy was issued, or^[4]
2. the named insured, or another operator who lives in the household or customarily drives an insured car, had a license suspended or revoked during the policy period and the action became final.^[4]

An OWI conviction leads to a license suspension or revocation imposed by the Secretary of State, so the second reason can come into play.^[11][4] The suspension periods are on what an OWI does to your driver's license.

A cancellation is not effective unless written notice is sent by certified mail at least 20 days before the cancellation date. The notice must give the reasons and state in bold type that the insured may appeal to the department within 7 days of mailing.^[12] A cancellation within the first 55 days for unacceptable risk cannot be appealed.^[12]

What insurers can see

Insurers and insurance support organizations may use driving-record information for claims investigation, antifraud, rating and underwriting.^[13] The SOS manual gives insurance rating as an example of a permissible use.^[14] The SOS manual says an impaired-driving conviction stays on the driving record permanently.^[15] A criminal set-aside does not change that, because a set-aside order must not require removal from the driving record.^[16] See how long an OWI stays on your record and what a set-aside does.

The SR-22 question

Some websites say every DUI driver needs an "SR-22." For Michigan, that is not what the sources reviewed for this guide show. The Secretary of State describes "financial-responsibility insurance," a certificate filed by the insurer's home office, as a requirement for a restricted license after a license is suspended because an uninsured at-fault driver did not pay a court judgment for crash damages.^[5] The SOS pages read do not mention an SR-22, and the Michigan OWI statutes read for this guide do not require one.^[5] A driver dealing with another state's licensing agency may face that state's own rules.

Household policies and excluded drivers

With the insured's authorization, a policy may exclude liability coverage when a named person drives. The policy must carry a warning that when the named excluded person drives, "all liability coverage is void," and the owners remain fully personally liable.^[17] A named excluded operator who drives that vehicle cannot collect PIP benefits.^[17] More on PIP is on no-fault benefits when the driver was intoxicated.

Practical steps

Insurers must file their underwriting rules with the state insurance commissioner before using them, and the filed rules are available for public inspection.^[18] A driver who receives a cancellation notice has a short window to appeal, so the date of mailing on the notice matters.^[12] Some practical habits help:

• Read every renewal and cancellation letter as soon as it arrives, and keep the envelope showing the mailing date.
• Ask the agent or insurer which written underwriting rule it is applying.
• Keep a copy of your own driving record, which can be bought at any Secretary of State office, so you know what an insurer sees.^[14]
• Read the policy's own terms on reporting license changes to the insurer.

Coverage limits and crash claims

For policies after 1 July 2020, Michigan's minimum bodily-injury liability limits are $250,000 per person and $500,000 per accident, plus $10,000 for property damage in another state, subject to exceptions in the statute.^[19] Those limits matter when an impaired driver causes a crash, because injured people may sue for losses above the no-fault thresholds.^[20][21] See suing an impaired driver after a crash. Court fines and other costs of the case are covered on fines, costs and fees after an OWI.