Why Is Auto Insurance in Michigan So Expensive?
I was having dinner with some friends the other night and somehow our conversation was steered towards auto insurance in Michigan. My friends knew that my business was insurance so I was the focal point of the conversation. The subject came about from an article that one of my friends had read basically stating that auto insurance rates in Michigan are much higher than the average state. Some but not all of my dinner guest were clients so it was a great surprise that the subject turned into auto insurance. As I explained to them and echoing what the article had said that it is true. We pay more for our auto insurance than the majority of states out there.
A good portion of the reason is for the fact that we are required to carry more or less premium insurance. Our policies provide unlimited personal injury protection which basically protects accident victims from every going bankrupt. From the high level of insurance we have it allows for more accident victims to capitalize which raises the rates for everyone. A study I read not too long ago estimated that the average Michigan household allocates 8% of their hard earned income just to their auto insurance. That was a shocking number. As i mentioned to everyone it doesn't magically make you pay less but having an understanding does help makes but a reasoning behind it.
The next point that somebody raised was if there was a way to lower their rates. My clients already knew the answer because it is a standard conversation I have before taking someone on but it was a great question to answer for my non-client friends. As I told them just because our state rates are high doesn't mean we have to pay more than our neighbors.
The solution to lowering your rates is to shop around and search for a company that will provide you with a lower rate. All insurance companies are not equal. Some companies want certain type of clients and will offer them the best rates. Other companies are run sloppy and incur high overhead costs and put the burden of paying for it on their customers. Some companies simply attract clients who have a lot of claims and are forced to continuously raise rates to offset their claim costs. What you need to do is find the company that fits what you are looking for.Luckily I am an independent agent and I represent numerous insurance carriers so part of my job is to shop my customers around to find the best rate. You may want to find a local independent agent also and ask them to save you some money.
A good portion of the reason is for the fact that we are required to carry more or less premium insurance. Our policies provide unlimited personal injury protection which basically protects accident victims from every going bankrupt. From the high level of insurance we have it allows for more accident victims to capitalize which raises the rates for everyone. A study I read not too long ago estimated that the average Michigan household allocates 8% of their hard earned income just to their auto insurance. That was a shocking number. As i mentioned to everyone it doesn't magically make you pay less but having an understanding does help makes but a reasoning behind it.
The next point that somebody raised was if there was a way to lower their rates. My clients already knew the answer because it is a standard conversation I have before taking someone on but it was a great question to answer for my non-client friends. As I told them just because our state rates are high doesn't mean we have to pay more than our neighbors.
The solution to lowering your rates is to shop around and search for a company that will provide you with a lower rate. All insurance companies are not equal. Some companies want certain type of clients and will offer them the best rates. Other companies are run sloppy and incur high overhead costs and put the burden of paying for it on their customers. Some companies simply attract clients who have a lot of claims and are forced to continuously raise rates to offset their claim costs. What you need to do is find the company that fits what you are looking for.Luckily I am an independent agent and I represent numerous insurance carriers so part of my job is to shop my customers around to find the best rate. You may want to find a local independent agent also and ask them to save you some money.
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