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Drivers in Michigan pay over 20% more than the national average for car insurance

Written by Katie Dee

Edited by Alyssa DiCrasto

Published on 2023-12-11

Read time: 3 min

Back in 2019, Michigan underwent an auto insurance reform that promised to save drivers money on their yearly premiums by allowing individuals to opt out of unlimited lifetime personal injury protection (PIP). Now, 4 years later, Michigan car insurance is still 22.1% more expensive than the national average.

Car insurance rates are highly personalized and depend on several factors, including your driving history, age, and – of course– the state you live in. According to Rate Retriever’s Auto Insurance Rates Quarterly Update, on average, drivers in Michigan pay $2,228 per year for their car insurance premiums. However, some drivers in the state face rates as high as $5,739 annually based on their unique driver profile.

Driver with hands on steering wheel

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What are the regulations for car insurance in Michigan?

One important thing to note about car insurance in this state is that gender is not considered in setting rates. Michigan is one of only 5 states in the U.S. where it is prohibited for insurers to take a policyholder’s gender into account while determining their premium.

In the state of Michigan, the minimum amount of car insurance coverage you need is at least $50,000 in bodily injury liability per person per accident, $100,000 in bodily injury per accident, and $10,000 in property damage liability per accident. Drivers can also get additional coverage, such as comprehensive, collision, and uninsured or underinsured motorist coverage.

The coverage level you choose will have an impact on the price you pay. On average, drivers with a minimum coverage car insurance policy pay 56% less than those with premium full coverage while those with a standard full coverage policy with slightly lower limits pay around 7% more.

The impact of credit score on car insurance in Michigan

Credit cards close up

According to Rate Retriever’s data, credit score plays a huge role in how much you will pay for Michigan car insurance. Drivers with poor credit are at risk of paying up to $5,739 per year for car insurance. This is 158% more than those with good credit.

Furthermore, drivers with fair credit pay an average of 29% more than those with good credit. That is a difference of $656 per year on average for an annual premium of $2,884. Conversely, having an excellent credit score is a good way to save money on your Michigan car insurance. These drivers save an average of 21% per year on their premiums with an annual rate of $1,754.  

However, in Michigan, insurance companies are not permitted to deny coverage or refuse to write or renew a policy based on credit score.

How your zip code is affecting your rates

Zip code is another major factor used to determine rates. Currently, the most expensive zip code in Michigan to insure your vehicle is 48205 in Detroit. This area has an average annual premium of $4,916. There are several reasons why car insurance might be pricier in this area of the state. Firstly, Detroit has a high population density of 4,606 people per square mile.

Densely populated areas like this bring a higher likelihood of car accidents, increasing the amount of risk that the policy introduces to an insurer. Additionally, this zip code brings with it an increased risk of car theft. According to News Channel 7, car theft in Detroit went up by 45% in 2022, further increasing the risk accrued by car insurance companies when they cover vehicles in this area.

The cheapest zip code in Michigan is 49456. The average annual premium for this area is $1,644 and it is located in Spring Lake. Being a more suburban neighborhood than Detroit, car insurance companies likely set lower rates for this zip code because there is less risk associated with it. With a population density of just over 900 people per square mile and a very low rate of car theft, drivers in Spring Lake are less likely to file a claim.

How to save money on car insurance in Michigan

Even with an annual premium almost 23% above the national average, there are still ways you can save money on car insurance in Michigan. One of the easiest ways to do this is to comparison shop and see which insurer in your area has the lowest rates for you. Take our short quiz to compare and find savings fast.

Another method to save money is to improve your credit score. Since those with poor credit pay over 150% more while those with excellent scores pay about 20% less for car insurance, raising your score is a good way to save money on your premium. The best way to do this is to be sure that you are paying your bills on time and that you do not have any outstanding payments due.

Next, raising your deductible can help to minimize your monthly car insurance rates. It is important to note that by doing this, you are accepting more financial responsibility if you ever have to file a claim. This means that while this will save you money in the short term, you may end up paying more in the long term. Keep this in mind before deciding to raise your deductible as it may not be the best option for every driver.

Completing a safe driving course is another way to cut down on costs. Several major car insurance companies offer discounts for policyholders who complete defensive driving courses because brushing up on your driver’s education makes you less of a risk to insure.

Besides all the options above, being a safe driver is the best way to decrease your annual premium. When car insurance companies determine the rate they would charge you, they will consider your driving record first and foremost. If you have a track record of safe habits, your annual premium will reflect that.

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