Michigan – Factors that Affect Auto Insurance Rates


The state of Michigan, similar to many other states, has made auto insurance mandatory to ensure each driver is paid in case of an accident. Every driver must have enough finances to cover the damages after an accident. There are two types of systems, the no fault system and the tort system. The Michigan state follows the no fault system. According to the no fault system, the driver of a car is paid by his own insurance company in the event of an accident. This is irrespective of whose fault it is. However, the state of Michigan does not follows perfect no fault system. Every state has a few modifications to the no fault system. The person at fault can be sued for damages in case the cost of damages crosses a pre decided limit.

The state of Michigan has fixed the minimum liability and the basic auto insurance one must have while on the roads of Michigan. The minimum for bodily injury is twenty thousand dollars per person per accident and forty thousand dollars in total per accident. Property damage should be of a minimum of ten thousand dollars along with property protection insurance for an amount a million dollars. Personal injury protection is made mandatory as well to ensure the drivers medical bills and lost wages are taken care of.

These are just the minimum sums fixed and accidents usually cause more damage. To be completely worry free, one has to obtain insurances for much large amounts. This will cost a lot of money. This article focuses on the different factors that decide the insurance rate.

The first and most basic factor would be the driver’s age. If the driver is below twenty five, statistics show that he is a rash driver and a high risk. The insurance rates and premiums for him will be higher. For drivers above fifty years of age and below sixty five years of age, the insurance premiums will be very low as they are the safest drivers, statistically. Gender would play an important role too as women are generally considered to be safer drivers than men and will be charged lower premiums. Married people, with families to go home to, will be much safer drivers than unmarried people. Hence, unmarried people are charged higher premiums.

The location of your house will play a huge role. If a driver lives in the centre of the city, he will be living amidst bustling traffic all the time. The chances of his being involved in an accident will be much greater and his premiums will be much higher. However, a rural dweller staying amidst sparse population and lesser number of cars will have a lower probability of being involved in an accident. His premiums will be much lower in comparison. The driving record of the driver will play large role in insurance premium rates as well. If the driver has had a clean record for the past three to five years, the insurance premium rates will be lower as he is considered to be a safe driver.