Understanding Auto Insurance in Michigan

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Auto insurance in Michigan can be expensive, but it doesn’t have to be. Some of the drivers in the state pay some of the highest rates across the country, but others don’t. With an understanding of the minimum requirements, the type of insurance you really need and what to expect when shopping for Michigan auto insurance, you will be able to get the right coverage, at an affordable price.

Minimum Required Coverage

In Michigan, drivers must carry minimum auto insurance called 20/40/10 coverage. This coverage provides Bodily Injury Liability coverage of $30,000 per injured person with a total of up to $40,000 per accident. It also provides Property Damage Liability coverage up to $10,000. Even though this is all you have to carry to legally drive in the state of Michigan, it’s important to understand how your Michigan auto insurance policy really breaks down.

If you’re involved in an accident, which includes injuries and property damages exceeding your coverage limits, it can put you in a very bad situation. Even with the no-fault system in Michigan, a bad car accident can easily bankrupt someone. It’s important to discuss higher coverage limits with your insurance agent before deciding on the right policy for your needs. Weighing risk versus the additional premium is an important part of making the right decision for your auto insurance coverage.

You can add many other coverage types to your policy, such as collision coverage, uninsured/underinsurance coverage, comprehensive coverage and many others. Policies including these coverage types are often referred to as full coverage auto insurance. Each situation will dictate which types of coverage are necessary to ensure the right level of protection.

Shopping For the Best Michigan Auto Insurance

Even with the state insurance regulators and insurance companies setting policy rates, it’s still important to compare policies. There can be huge price differences from one company to another and getting the right coverage can provide a different range of prices from one company to another. It’s always a good idea to get a few quotes before settling on the company that’s right for you.

Factors Used to Determine Your Policy Rate

As you look at your quote, it’s important to ensure you understand the factors used to determine your rate. This can help with seeing the difference from one insurance company to another. The state of Michigan allows auto insurance companies to use these factors to determine your rate:

  • Driving Record – If you’ve been cited for speeding, other moving violations or have been involved in accidents, you’re insurance rates will be higher.
  • Age/Experience – Younger drivers tend to be considered more of a risk and pay a higher premium for auto insurance in Michigan.
  • Type of Vehicle – Your vehicle makes a difference and the more expensive the vehicle, the more expensive the insurance policy.
  • Territory – The city or area you live in also makes a difference in your rate. Some areas are considered higher risk because of theft and traffic.

You may receive a discount on your insurance policy for:

  • Good grades in school
  • Good driving record
  • Air bags
  • Anti-lock brakes
  • Multiple vehicles on one policy
  • Multiple policies with one insurer
  • Anti-theft devices
  • Good credit score

Many different things go into figuring out your rate and not all companies use the same factors. For example, some companies may not consider your credit at all, while others may pull a full credit report and use it as a factor in determining your rate. It’s important to understand how your Michigan auto insurance company is figuring your policy rate and comparing a few companies will help you see the differences.


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