What is Michigan 7-Day Insurance? Should I Get It?

A 7-day insurance policy was a type of car insurance policy exclusively available in Michigan. In theory, 7-day insurance existed so that drivers could take a little more time to find the best deal for longer-term coverage. In reality, most people who bought 7-day auto insurance coverage paid for the week, registered or renewed their car's registration with the State of Michigan, and then let the insurance lapse, while still driving with current registration. Due to this widespread abuse of the policy, it's been banned and is no longer available to buy in Michigan.

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Why people bought 7-day insurance

There were two possible reasons to purchase 7-day insurance. One was the official — and legal — reason it existed: using the extra time to find the best price you could on a full-length policy. But the far more common — and illegal — reason people bought 7-day insurance was to temporarily receive coverage while they renewed their registration and then let the coverage lapse afterward.

They would buy a short-term policy in order to register their car with the state. Then, once they secured license plates or updated tags, they let the car insurance lapse after the week was over. In theory, a driver could have continued to purchase 7-day insurance every week to maintain coverage, but that wasn't very common, as the Michigan secretary of state found that about four in five people who bought 7-day auto insurance didn't renew their coverage at the end of the week.

In short, people bought — and then skipped out on — 7-day coverage, because they couldn't afford regular car insurance. Michigan is among the most expensive states in the nation for insurance, with an average premium of $1,364 per year, because of its extremely generous mandatory personal injury protection (PIP) coverage. But in Detroit, premiums can easily reach almost five times that amount or more: Detroit drivers can expect to pay an astonishing $6,197 per year for car insurance. Often, the up-front cost is disproportionately high, as insurance companies require drivers to make a large down payment at the start of coverage.

The consequences of letting 7-day insurance lapse in Michigan

It's illegal to drive without car insurance in Michigan, and buying a one-week insurance policy, then letting it lapse, was treated the same as not buying insurance in the first place. If you're caught driving without insurance, you're subject to a fine of $200 to $500, and repeat offenders may even face jail time.

Furthermore, if you get in an accident in Michigan and aren't covered by insurance, you're responsible for all of the expenses of the accident, including the medical bills of the other party. And this is true even if the other party is completely to blame for the accident. So, there's a big risk involved in driving without insurance, even if you are a careful driver.

Finally, insurance companies charge higher rates to drivers who have not had continuous coverage or have recently let their coverage drop. So, if you go without insurance now, even if nothing bad happens while you're unprotected, you'll be penalized later.

Who offers 7-day insurance in Michigan?

While 7-day insurance is no longer available in Michigan, L.A. Insurance, which is based in Royal Oak and has 103 locations in most major cities around the state, has skirted the ban by offering 6-month policies that self-cancel if no premium is received within 13 days.

The 7-day insurance rate tends to cost $200 to $300 (or more) from L.A. Insurance, or around $800 to $1,300 per month. In contrast, the average rate for a full-term auto insurance policy in Michigan is $254.91 per month. The average driver would spend 3.5 times more by buying insurance on a weekly basis, so you're much more likely to save money by purchasing a full policy from an insurer.

Alternatives to 7-day insurance

If you're considering purchasing a 6-month auto insurance policy from L.A. Insurance just to find the cheapest auto insurance rate, it's better to spend an hour collecting quotes immediately. You can even do this on your smartphone at the car dealership or the SOS office. And if you do happen to find a better insurance rate after you sign up, most insurers let you cancel with minimal to no penalty.

Additionally, you should always check with several insurers for their best rates, as they vary significantly by provider. For example, in our study of the best rates for car insurance in Michigan, the most expensive insurer, Allstate, charged more than five times as much for a year of coverage than the least expensive provider, Progressive.