December 3, 2022
  • December 3, 2022

Best Auto Insurance In Michigan With Bad Credit

By on June 11, 2021 0

According to III (the Insurance Information Institute), drivers with low credit scores are charged more for insurance because they are more likely to file a claim. All states except California, Hawaii, Massachusetts, and Washington allow insurance companies to use credit scores when pricing premiums.

Michigan drivers with a low credit score may pay more for auto insurance than their peers – in some cases, much more. On average, nationally, drivers with poor credit can pay about 131% more for full coverage auto insurance than drivers with good credit. In Michigan, the cost of auto insurance increases on average by about 170% for drivers with poor credit compared to drivers with good credit, based on Bankrate’s review of annual bonuses offered by Quadrant Information Services.

Michigan Full Coverage Auto Insurance Average Cost Per Credit

Provider Bad credit Average credit Good credit Excellent credit
Average condition $ 6,209 $ 2,981 $ 2,309 $ 2,117
national average $ 3,873 $ 1,865 $ 1,674 $ 1,487

Best Auto Insurance In Michigan With Bad Credit

While Michigan drivers with bad credit pay an average of $ 6,209 per year for auto insurance, the state average for drivers with good credit is $ 2,309, which is a difference. of approximately $ 3,900. While this difference is important, it’s important to know that your rates are unlikely to be the same and that there are steps you can take to ease the higher rates depending on your credit situation.

Michigan rates may take into account information obtained from your credit insurance report – a report unique to insurers that may take into account the same information that is included in your credit reports issued by the. Big three – TransUnion, Equifax and Experian.

Depending on your money and debt history, insurers may classify your “credit rate” into one of the following designations:

  • Poor
  • Average
  • Good
  • Excellent

This is very similar to how you can be labeled on your credit report from one of the major reporting agencies. The difference between the two is that a low credit score can prevent you from accessing things like loans or lines of credit, while a low insurance credit score will just affect what you pay for it. coverage (depending on state and provider).

Why is my credit affecting my auto insurance rates in Michigan?

Studies have shown that there is a definitive correlation between low credit scores and a higher amount of claims. Recent and past studies have shown this, including a study by the Texas Department of Insurance in 2004 and a study by the Federal Trade Commission in 2007. The FTC report cited a Metlife study in which it was found that drivers with low credit scores are at 50% higher risk to the business. For other types of insurance, such as homeowners, the risk was even greater.

For many drivers, improving your credit scores or your history will have a direct impact on the cost of auto insurance. However, you may not see rates improve immediately after your credit score improves. Premiums are usually reassessed when you renew your 6 or 12 month policy.

This means that if you improve your credit score, your auto insurance provider may not adjust rates until the renewal date. Drivers looking to obtain an earlier rate may prefer to switch providers. A new provider will see your most recent credit data and can provide you with a quote for your current rate.

However, if you are getting discounts for loyal customers, you might want to think twice before switching whether the savings are worth it. Your policy will be renewed again eventually, so the benefit of keeping the loyalty discount could work well in the long run. Speak to your current provider to discuss your options to determine what might be the best situation for you.

What Other Factors Affect Auto Insurance Rates in Michigan?

The factors that affect your Michigan auto insurance rates extend just beyond your credit situation. The true cost of auto insurance often comes down to the following factors:

  • State or metro: Some postal codes receive a much higher number of complaints than others. Whether it is due to accidents, theft or natural disasters. For example, drivers in Tampa, Florida pay about $ 450 more than drivers in Orlando, Florida.
  • Vehicle type: Pick a BMW 330i and you could pay a nationwide average of $ 2,225 per year for full coverage auto insurance. For the Honda Odyssey, prices average $ 1,454 per year for full coverage. For Michigan drivers, vehicle choice is likely to come at varying rates as well.
  • Driving history: A DUI conviction in Michigan could cause you to increase your premium by 119% or more. DUIs, or other high risk factors, are often the primary contributors to high insurance costs.

How To Get Cheap Car Insurance In Michigan With Bad Credit

Improving your creditworthiness can help you get cheaper car insurance in the long run. This is obviously not an immediate process, but it will likely pay off quite a bit over time. One proactive step you can take is to review the information on your credit report for any errors. While mistakes can happen, you may be able to dispute them and see your creditworthiness improve faster.

In addition to improving your credit score, you can find cheap bad credit auto insurance in Michigan just like if you had good credit. Adopt the following strategies and the chances of finding a lower premium are greatly improved:

  • Compare the prices: Some companies don’t penalize bad credits as much as others. Shop around and compare quotes from several insurers and you will likely find one that offers the best rates for the coverage you need.
  • Compare discounts: Although many companies offer similar discounts, the exact amount of savings varies by provider. To see how much you could save and what the best discounts are, you may need to speak directly with an agent.
  • Increase your deductible: Most companies offer a variety of deductible options on specific coverage, so you can choose the one that best fits your budget and coverage needs. Increasing your deductible means you’ll be responsible for a greater portion of the repair costs after an accident, so speak to an agent to determine what might meet your needs.
  • Be a responsible driver: Whether or not you have bad credit, your driving history plays a big role in your premium. Staying accident and loss free can lower your costs, and many providers encourage good driving with discounts you can claim quite easily.

Frequently Asked Questions

Will I get a credit check when I get an insurance quote?

You can, but it won’t necessarily hurt your credit, as this is a gentle credit check. A credit check only affects your credit score when you are looking to take out a loan or get a line of credit, which is called a rigorous credit check.

Which Company Offers The Best Bad Credit Auto Insurance In Michigan?

The best auto insurance for bad credit in Michigan depends on the unique circumstances of each driver. The best thing to do is shop around, knowing that each business rates the importance of strong credit differently.

Methodology

Bankrate uses Quadrant Information Services to analyze 2021 rates for all zip codes and carriers in all 50 states and Washington, DC Rates shown are based on a 40 year old male and female driver with a clean driving record , various credit levels and full coverage limits:

  • $ 100,000 liability for bodily injury per person
  • $ 300,000 liability for bodily injury per accident
  • Civil liability for property damage of $ 50,000 per accident
  • $ 100,000 in bodily injury caused by an uninsured motorist per person
  • $ 300,000 in uninsured bodily injury per accident to a motorist
  • $ 500 collision deductible
  • Global deductible of $ 500

To determine the minimum coverage limits, Bankrate used minimum coverage that meets the requirements of each state. Our basic profile drivers own a 2019 Toyota Camry, commute five days a week and cover 12,000 miles a year.

These are sample rates and should only be used for comparison purposes.

Credit: Rates have been calculated based on the following insurance credit levels assigned to our drivers: “poor, average, good (basic) and excellent.” Insurance credit levels take into account your credit scores official, but do not depend solely on this variable The following states do not allow credit to be a factor in determining auto insurance rates: CA, HI, MA