This is hands-down the most common question we get at Mason-McBride. We understand how frustrating rising auto insurance rates are — we have to pay the premiums too! Even good drivers are victims of getting their annual premiums raised.
There are several reasons why your car insurance company is raising your rate, but the most common are accident claims, credit score, and medical costs.
What Affects Auto Insurance Rates in Michigan?
Claims and tickets are an apparent reason why your rates are increasing. If you’re involved in an accident or get a speeding ticket, your insurance company will raise your rates- period. That’s why it’s so common for people to pay for minor accidents out-of-pocket.
Industry secret: more often than not, paying for a minor accident yourself is much cheaper than filing a claim. After one accident, it is common for rates to increase as little as 10% to as high as 40%, depending on your carrier.
As traffic continued to pollute the roads and distracted driving accidents increased, the rate of claims also increased, and the rate of claims is also increasing. Insurance companies study the traffic patterns in your area and adjust annual premiums according to the level of risk present.
Does Credit Score Impact Auto Rates?
This is one of the main factors that influence your auto insurance rates. For example, if your credit score recently went down over the past year, there is a good chance your auto insurance rates will increase.
Technically, insurance companies can’t legally base rates on your credit score. It is referred to as an “insurance score.” It works as a type of discount system, so if your credit score is higher, you can/will receive a multi-line or loyalty discount off of that premium. However, you will pay a high premium if your credit score is low.
This is a controversial factor because credit score does not directly influence driving habits. However, one way to improve your high premium situation is to raise your credit score.
Do Medical Costs Impact Auto Rates in Michigan?
People are driving more than ever before, which inevitably increases the rate of accidents. The cost of claims is also rising, and the reason is the soaring rate of medical expenses.
To put it in perspective, in 1960, the healthcare cost for one person was about $146 per year. In 2017, the annual healthcare cost per person was $10,739. That’s an increase of over 7,000%! Since car insurance policies cover both the driver and passengers with liability and car collision coverage, it makes economic sense that rates are increasing. If the insurance company pays for more claims, premiums have to improve.
We are a “No-Fault” state in Michigan, so Personal Injury Protection, PIP, is integrated into that law. PIP is meant to cover a driver’s medical bills in a car accident and is not dependent on who is at fault for the accident (hence the no-fault part).
There is no fee schedule with PIP, so many services are eligible for a claim, including medical, medication, surgical, hospital expenses, rehab, and ambulance expenses. In addition, if you are disabled in an accident, PIP will pay for 85% of lost wages for up to 3 years. PIP also covers funeral expenses/death benefits and attorney fees.
Car insurance can be just as expensive for you as the actual carrier, in some cases.
How Can You Lower Your Auto Premium?
The best way to lower your premium in Michigan is to be a safe driver. Pay attention to traffic laws, put your phone on silent in your glovebox, and keep distractions minimum.
Working with an independent insurance agency like Mason-McBride can also lower your premium. How? We aren’t tied down to do business with only one insurance carrier as an independent agency. We find you the perfect combination of price and coverage that fits your unique needs.
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