Despite reforms, Michigan insurance rates are some of the highest in the nation: Here's why

After the insurance reform, Michigan saw improvements in pricing. However, there are still some factors keeping rates high. Here are the major factors making insurance higher than average in Michigan:

Where in Michigan are rates the highest?

While insurance is high throughout Michigan, it is higher in some parts of the state than others. The most expensive city in Michigan for insurance is Highland Park, a suburb of Detroit, with average annual rates topping out at $6,563. Meanwhile, the cheapest place in the state insurance-wise is St. Joseph, a small city on Lake Michigan, where insurance is actually less than the national average — around $2,032 for the year. 

As we know, the state laws have an impact on insurance prices being high, but clearly that’s not the whole story when we see variation of 222% between two cities a little over 100 miles apart in the same state.

If you're curious what the average insurance rate is in your area, you can find your ZIP code on this chart to see what others in your immediate area are paying. 

What's happening in Detroit?

Let’s look at Detroit specifically because it is one of the top 10 most expensive cities for car insurance in Michigan. In fact, all of these cities are either Detroit itself or a suburb in the Detroit metro area. This seems to go against the insurance reform intended to prevent ZIP codes from being a major factor in determining insurance rates. There are some loopholes in the language of the law that allow insurance companies to assign risk by "territory," as long as ZIP codes do not define those territories. 

Detroit is a densely populated area that has historically had high crime, including car theft and vandalism and high rates of uninsured drivers. At one point, 60% of Detroit drivers were thought to be uninsured. Although it should be noted that after the 2020 auto insurance reform brought prices down, the number of uninsured motorists also decreased.^[4]

One source dove into the racial component and found that Black customers were consistently paying more than white customers, and that this was true even when comprehensive coverage was taken out of the equation.^[5] Comprehensive coverage would protect against things like theft and vandalism in high-crime neighborhoods, so higher incidences of those perils should theoretically not change insurance rates since they wouldn't be covered anyway. The population of Detroit and surrounding areas is largely Black (76.8%), whereas the population of Michigan as a whole is predominantly white (73%).^[6]

But let's not forget the demographic factors that insurance companies are allowed to consider, for example, age. We'll dive into age in the next section, but suffice it to say, it can have a huge impact on what you pay for auto insurance, and younger, less-experienced drivers tend to pay more. Detroit has a younger population, particularly when compared to the overall state population. The median age in Detroit is lower than the state median age, and the city's population pyramid shows a higher concentration of younger age groups.^[6] Let's dig more into the difference age makes throughout the state. 

Age and insurance prices in Michigan

As drivers age, their insurance rates change. Essentially, insurance companies assign a risk profile for drivers based on their perceived experience level. Younger drivers are considered to be riskier drivers than, say, middle-aged ones. 

Michigan sees this phenomenon too, in line with the national average. For example, the highest rate is for brand-new 16-year-old drivers and averages $9,693 in Michigan. The average 50-year-old in the state pays $2,730 a year, which is a decrease of 255%. 

The amounts go down by nearly half by the time a Michigan driver reaches age 20 and continue to decrease (though less sharply) each year until they reach 62. At this point, the numbers start going back up. The assumption is that as drivers age, although they may have greater experience, they may also experience slower reaction times and/or poorer vision. 

Violations and insurance prices in Michigan

How you drive will always be a big predictor of how much you will be expected to pay for car insurance. Having previous violations on your record is a good indicator to an insurance company of how you drive so that they will factor that into the pricing going forward. 

Having a DUI is one of the worst violations you can have in terms of an insurance increase. It will increase your car insurance to $7,089, which is a significant markup (a 186% increase), but still less than you might pay as a result of being a teen driver or based on where you live, such as in Detroit. 

What raises your insurance the most in Michigan?

The cost of insurance in Michigan is high for a number of reasons listed above; however, despite non-driving factors (like where you live, your credit score, etc.) supposedly being taken out of the equation, it seems that where you live still plays the biggest role in how much you pay. As mentioned above, this is due to some loopholes in the law's language. Insurance companies in Michigan cannot rate you based on your ZIP code, but they can create defined territories and base their ratings on that, so where you live is still a big factor. 

Let's compare just how much the following might raise your rates: 

What can you do to save on insurance in Michigan?

Prices for insurance did come down a bit after the insurance reform in Michigan five years ago, which led to many previously uninsured drivers being able to find insurance. However, prices are still incredibly high in the state. And as you can see above, things that may be out of your control, like where you live or your age, still have as big, if not bigger, an impact on your rates than how you drive.

However, here are some tips for helping you save. 

• Bundle your home/renters/condo insurance policy with your auto policy for savings.
• Consider all possible discounts that might apply to you.
• Shop around and find the right carrier. Some insurance companies are better for teens or for drivers in certain areas. 

Methodology

This report analyzes over 32 million car insurance rates to examine how dozens of trends and risk factors affect insurance pricing nationwide.

The auto insurance rates displayed throughout this page come from The Zebra’s Dynamic Insurance Rating Tool. This proprietary insurance premium estimator uses the most recent rate filings across the United States at the ZIP code level to provide the most recent and up-to-date rate data. This data comes from Quadrant Information Services, which sources the most recent and approved rate filings across insurance companies in every state from S&P Global.

Unless other variables like age are applied, rates are based on a sample driver profile — a 30-year-old single male driver with a Honda Accord and full coverage at these levels:

• $50,000 per person/$100,000 per incident for bodily injury liability
• $50,000 per incident for property damage liability
• $500 deductibles for collision and comprehensive coverage

To provide insight to consumers on how specific personal factors (like age, location and coverage level) can affect your premium, this base profile is then adjusted for different factors commonly used by insurance companies.