Michigan holds the record for the highest car insurance premiums in the nation. In fact, residents pay an average of $200 more than the national average each month — more than New Yorkers, Californians and Alaskans. Michigan has relatively aggressive no-fault regulations that keep premiums high, but you don’t have to settle for incredibly steep rates. With a bit of effort, you could knock a chunk of change off your monthly premium.
Each insurance company uses numerous factors to calculate rates, including your driving record, credit history and vehicle value. That’s why the best car insurance premiums tend to go to those who shop around — and you’ll certainly need to do a bit of work to get a list of competitive quotes in Michigan.
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Our Top 4 Picks for the Best Cheap Car Insurance in Michigan
Each of these companies has an “above average” or higher customer service rating in the North-Central region, according to J.D. Power. They also maintain a rating of “Excellent” from A.M. Best, which analyzes companies for financial strength and solvency. When searching for insurers, you want great customer service and peace of mind that they’ll have the money to pay your claim, too.
After comparing the numbers, Progressive takes the prize for lowest annual premium price. There is more than a $1,000 difference between the cheapest and most expensive quotes. Auto-Owners, the next cheapest option, is still almost $400 more expensive. Nationwide charges over $600 more for the exact same coverage, and State Farm was the most expensive, at $2,964.
Michigan’s Minimum Coverage Requirements for 2020
Michigan mandates that drivers carry three types of insurance: personal injury protection, property protection and residual bodily injury/property damage liability, in a combination known as 20/40/10. That’s short for $20,000 per person hurt in an accident, $40,000 per accident if multiple people are included, and $10,000 for property damages that are incurred out of state; property protection covers up to $1 million in property damage in state.
Why is Michigan auto insurance so expensive?
Michigan, along with 12 other states, maintains a no-fault auto insurance regulation. This mandates that drivers carry personal injury protection to recover losses through their own insurance, regardless of who was at fault in the accident. The intent behind the no-fault insurance regulation is to keep the civil courts from becoming clogged with small claims of wage loss, medical expenditures, funeral costs and other related expenses.
If there are 12 other states that require personal injury protection under no-fault regulation, why are premiums still $1,400 more than in Delaware, another no-fault state? Michigan isn’t just a no-fault state; it’s the only state in the country that imposes unlimited lifetime coverage for catastrophic injuries. Between a driver’s mandated coverage (personal injury protection, property protection and residual bodily injury and property damage liability) and the Michigan Catastrophic Claims Association, which is a special fund set up to cover what insurers won’t, victims of a crash receive unlimited medical coverage for as long as they need it.
As you can imagine, this is a hotly debated topic. Opponents of the no-fault system are most often insurance companies that must pay the incredible costs of life-altering accidents. Legal drivers also feel the heat as premiums rise in order to meet the demand put on the insurance system.
Do you need more than the minimum coverage?
In Michigan, the no-fault system means that insurance will pay for injuries and damages, whereas, in a tort state, the insurance company of the person at fault pays the brunt of the bill. So, think about yourself, and the possibility of shelling out nearly $60,000 on medical expenses. Even if you have enough health insurance to cover those bills, the damages to your car won’t be covered by collision or comprehensive since those aren’t included in the state minimums. That means you are either pouring money into a metaphorical hole (your car), or starting over fresh with another auto loan. It also means that you should consider how much your health insurance does cover. If it’s not much, buy more protection; if it’s a lot, you might be able to decrease your auto insurance coverage.
You might also want to consider Michigan winters, which are almost a thing of legend. Several years ago, there was a deadly 150-car pileup on a snowy highway in Battle Creek. Given the state’s severe weather conditions and bountiful animal population, the chances of sliding into a light pole or bumping a moose are very real.
What types of collision insurance should you consider?
Collision coverage comes in two sizes: broad collision and limited collision. Collision insurance generally covers impacts you may have with non-moving objects such as a parked car. More specifically, broad collision insures your vehicle regardless of who bears substantial fault, and limited collision will cover you only if the driver of the insured vehicle is not substantially at-fault.
What is comprehensive insurance?
Besides collision insurance, comprehensive insurance is another option. Comprehensive coverage kicks in when you collide with an animal or if an object, such as a tree, falls onto your vehicle. If your car is stolen or vandalized, or if a natural disaster such as a fire or a tornado damages your car, comprehensive insurance will cover it.
Should you have uninsured motorist coverage?
Since almost 22 percent of Michigan’s drivers are uninsured, you should look into underinsured or uninsured motorist coverage. This type of coverage will protect you if you are involved in an accident with someone who has no coverage or who doesn’t have enough coverage to pay for your property damages.
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What if you don’t have car insurance?
Thinking about living on the edge? Don’t. Along with a misdemeanor conviction on your permanent record, you can be hit with some hefty fines ($200-$500) and/or up to a year in jail. You will also be entirely responsible for any damage that you may cause in the event of an accident.
Do you need SR-22 insurance?
Drivers who have been cited for driving under the influence, driving without insurance or being a habitually bad driver may be required to pick up SR-22 insurance until those violations drop off their records. The SR-22 policy, which is not technically insurance, must be filled out and filed with the state by your insurance company. Because this policy is required of drivers with bad driving records, signing up for SR-22 insurance is expensive. Your regular insurance rate will go up, and you’ll have to pay your insurer to file the paperwork.
It’s Best to Shop for a New Policy Every Couple of Years
In the insurance world, everything is a measure of risk. Your age, driving record, credit score — they’re all factors of how risky you are to insure. In recent years, a new version of risk has begun to alter the market. Insurance companies want to know what the chances are that you’ll walk off into the sunset holding another insurance company’s hand.
They use a technique called price optimization in which they gather information about you, such as your online shopping habits, social media activity, and even how long you’ve been with your current cellphone provider. Complex algorithms then estimate your propensity to shop for new and better deals. By calculating the extent of your loyalty, they can better estimate how much they could charge you before your limits are reached.
They say that the best offense is a good defense, and it’s no exception here. Shopping for insurance with other car insurance companies could result in massive savings. But even if you strike out, it will show your current provider that you aren’t happy paying more than you should.
Many states like Ohio and Maryland (15 in total) have addressed price optimization with legal bulletins. Most have required companies to stop the use of non-risk-related profiles in calculating premiums. Others have simply required insurers to be transparent with their customers regarding price optimization. Michigan, with its already highly regulated insurance system, does not currently have any stance on price optimization. If you are concerned about your rates being influenced by these factors, the first thing you should do is contact your insurance agent for an explanation and perhaps your next move should be a letter to your senator. The next thing you should do is start shopping around.
If you are a good driver, you may be eligible for an insurance discount based on your clean driving record and your consistent carriage of auto insurance. Even if you are a good driver with bad credit, you may qualify for some bundling services or reduced rates. Bad credit is typically defined as having a credit score below 670. If this sounds like you, there are still options to help you reduce your insurance premiums. First, think about your vehicle. If you have a loan, you’re likely required to have extensive coverage, but if you own the vehicle, consider what types of coverage are right for you. For example, if your car is worth $4,000 or less, you probably don’t need collision insurance because your car isn’t worth enough to fix in the event of a bad accident.
If you are a new driver or if you have a new driver on your insurance policy, you may be hit by some higher premiums. Because new drivers don’t have any driving history, there’s no proof of whether or not they are a good driver. Therefore, most insurance policies for new drivers are costlier. In many cases, this cost decreases over time; young drivers will likely see their rates lower when they hit 20 years old, and older drivers with clean records eventually see lowered rates, as well.
In the meantime, look for multi-policy discounts, multi-car discounts, equipment discounts for anti-theft devices, and even good student discounts. You can also save money by driving a moderately priced vehicle rather than a luxury model. Either way, practice good driving and eventually you’ll see your insurance rates decrease.
Best Car Insurance in Michigan
- Auto-Owners Insurance
- State Farm
Michigan has the highest car insurance rates in the country, and that’s a huge bummer. However, it’s relatively easy to make sure you’re getting the best policy for yourself at the best price. Take the time to get some quotes and compare them. This is the only way you’re going to beat the average and find the most competitive rates around. What are you waiting for? Go save some money.