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Car Insurance Comparison: What Are the Factors That Influence the Cost of Car Insurance?

August 4, 2022 Auto Insurance

Michigan has some of the country’s most complex car insurance requirements, with similarly complex qualifications for car insurance rates. When comparing car insurance rates, know what factors could influence your rates. See the paragraphs below to learn more about how these factors could affect your rates.

Credit Score

While many states consider a credit score as a direct factor for car insurance rates, Michigan does not allow car insurance companies to use your credit score as a consideration to determine your rate. However, the exact same factors that are used to create your credit score can be used to create an “insurance score” which is allowed in insurance rating. This is a distinction without a difference that serves as a talking point for politicians without bringing any meaningful changes to the way in which credit data is used in insurance pricing. 

Location (State)

Where you live can affect your car insurance rates. While Michigan doesn’t allow car insurance companies to consider zip codes to determine your premiums, your provider may use your city or other location-based factors to score your level of risk for a claim.

High-risk areas include:

  • High-crime areas
  • Areas where drivers file more claims
  • Areas prone to natural disasters
  • Heavily populated urban areas

Continuous Coverage

Maintaining your car insurance demonstrates less risky driving behavior and less risk of having to pay a claim than if you allow your car insurance coverage to lapse. Car insurance companies determine rates based on risk. Your premiums could be extremely high to get the required coverage if you fail to maintain continuous coverage.

Driving Record

A driving history that includes risky behavior can sharply increase your premiums. A bad driving history could include a speeding ticket, an accident, or a conviction for DUI. Car insurance companies could more than double your premium for a DUI.

One thing that could affect your driving history or claim history factors is that Michigan is a no-fault state. In a no-fault state, you must file an accident claim with your insurance company, regardless of who caused the accident.

Average Annual Mileage

Car insurance companies consider more time on the road to put you at higher risk of having a car accident and making a claim. A higher annual mileage could put you into a high-risk category and could cause your provider to increase your rates or for new providers to give higher quotes when comparing car insurance.


Rates are typically higher for young drivers under 25 and older drivers over 75. Youth and inexperience put younger drivers at higher risk of having a car accident, while deteriorating eyesight and slower reflexes increase the risk of an accident for older drivers.

While many states also consider gender in their calculations for risk, such as a 20-year-old female paying less in premiums than a 20-year-old male, Michigan does not allow gender to factor into car insurance rate quotes.

Vehicle Make and Model

The age, make, and model of your vehicle can also affect your car insurance premiums. While new cars tend to have a higher base rate, discounts for safety features could reduce the rate for savings over an older model car.

Other Factors

While many states consider credit score as a determining factor in car insurance rates, Michigan disallows any non-driving or non-insurance factors. So while other states also factor gender into their insurance rates, Michigan does not distinguish between genders for insurance rates.

You may also pay more for added coverage beyond the state minimums. Additional coverage may include:

  • Collision insurance
  • Comprehensive coverage
  • Uninsured/underinsured motorist coverage
  • Accidental death insurance

Michigan Minimum Coverage Limit

Michigan has some of the most extensive coverage required for drivers in any state. The minimum coverage limit includes:

  • $50,000 bodily injury liability per person
  • $100,000 bodily injury liability per accident (multiple people injured)
  • $10,000 property damage liability

If you do not carry qualifying health insurance, you must also carry some form of personal injury protection (PIP) coverage for your own injuries. The options for PIP coverage in Michigan are:

  • None (opt-out if you have appropriate health insurance coverage)
  • $50,000 (lowest option allowed with Medicaid)
  • $250,000
  • $500,000
  • Unlimited

When comparing car insurance, be sure to understand the minimum coverage limits and what they mean. Bodily injury liability covers injuries for the driver and passengers in the other car, while property damage liability covers damage to the other vehicle for accidents outside the state. The dollar amount shown describes the maximum payout for each condition.

Contact Encore Insurance for Help Comparing Car Insurance Plans in Michigan

If you are comparing car insurance providers and plans in Michigan, an experienced car insurance agent from Encore Insurance can help. Call us today at 248-466-0190 or contact us online to schedule your free quote appointment.