Anyone that has filed for Auto Insurance in Michigan knows that there are numerous factors that play into the final cost of your insurance premium. Some of these are easy to figure out just by the question your insurance agent is asking you – some are not. Using your personal information and company claim data, car insurance companies use their own algorithms to make an educated guess on how likely you are to file a claim – or in other words, how much are you going to cost the insurance company.


Top 8 Factors That Affect Your Auto Insurance In Michigan

1. Your Location

Your location is one of the most important factors that affect your auto insurance. If you are in a highly populated, urban, area then accidents and insurance claim chances are higher. This is a large reason why Detroit is the most expensive city for Car Insurance in Michigan (and the entire United States).

Your location will also tell the insurance company the rate of vandalism, stolen cars, and fraudulent claims in the area. Damaging weather will also appear in this search. Although let’s face it, we live in Michigan – there is no way to escape damaging winter weather in our state.

2. Your Age

The lower the age of the driver, the higher the insurance rates will be. This is because insurance companies believe that younger drivers will crash or cause damage a lot. They don’t do this to discriminate. Numbers and logic back up these claims. Younger drivers have been driving for a shorter amount of time, and are considered to be novices behind the wheel. They are also prone to get distracted.

Take a look at the statistics below, courtesy of IIHS, of the number of fatal accidents in 2017 that involved teenager drivers – and what the total percentage of fatal accidents teenager drivers were involved in.

Accidents = Claims. And as we mentioned before, claims cost the insurance companies money.

3. Marital Status

This factor, as many of the others, is purely based on statistics.

Married couples have been found to be less active and safer than single drivers. This resulted in fewer accidents and claims. There are studies out there that claim that single drivers are twice as likely to be in an auto accident than married drivers.

Auto Insurance Rates for married couples in Michigan can be 4 – 15 percent lower than for single drivers. Married couples also receive a bonus perk when they combine their policies to receive a multi-car policy discount. To take it a step further, married couples can also bundle their homeowner’s insurance policy and get an even bigger discount on their auto.

4. Credit History

Yes, credit history.

Based on numerous studies and research, people with lower credit scores (typically under 600) are more likely to file more claims, file inflated claims, and even commit insurance fraud.

Your credit history and rating may also affect how your insurance company allows you to pay for your auto insurance. Because a low credit rating is often a sign of a history of missed payments, insurance companies may charge those with a lower credit rating a higher upfront premium.


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5. Vehicle Type

Depending on the vehicle you drive, your insurance can be lower or higher. If the insurance company’s data shows that the model of your vehicle has been in more accidents or filed more claims – your insurance premium will most likely be higher. Factors such as the theft rate, cost of repairs, and safety tests also have an impact on your vehicle type’s insurance rate.

6. Frequent Use of Car

Insurance companies want to know why you are using your car, and where you drive it. A car that is being used every day to and from work (or school) has a much higher chance of getting in an accident than a car that you take out for a joy ride twice a month.

Another common way for insurance companies to phrase this question is by asking for the annual mileage you put on the car. A car with lower annual mileage will be less likely to be involved in an accident, thus making it less likely for a claim to be made.

7. Your Driving Record

This one is a bit obvious. If you are a terrible driver, with 4 speeding tickets and a DUI, you are more likely to be involved in a car accident than someone who is a careful driver. Major violations such as a DUI can cause your Auto Insurance in Michigan to skyrocket up to 100% than before the DUI.

8. Car Insurance Coverages (and deductibles)

The more types of coverage with higher limits you have, the more it will cost you since the insurance company is taking on additional risk by giving you more coverage. Keep in mind that while minimum coverage is great on a month-to-month basis for your budget, long term it may not be the best idea. The bare minimum coverage allowed in Michigan may not be enough to cover a major accident or your car is totaled.


What Compass Insurance Agency Recommends

Now that you know some of the major factors that affect your car insurance, you can see why an independent agent (like us) is the way to go when shopping for car insurance in Michigan.

An independent agent can run all of these numbers and factors against 20 insurance company’s and their data to find you the best possible rate fast.