Best auto insurance in Michigan with bad credit

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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. Every state except California, Hawaii, Massachusetts and Washington allows insurance companies to use credit scores when pricing premiums.

Drivers in Michigan with a low credit score may pay more for car insurance than their peers — in some cases, a lot more. On average, nationally, drivers with poor credit may pay around 131% more for full coverage car insurance than drivers with good credit. In Michigan, the cost of car insurance increases an average of about 170% for drivers with poor credit compared to drivers with good credit, based on Bankrate’s review of quoted annual premiums from Quadrant Information Services.

Average cost of full coverage car insurance in Michigan by credit

Provider Poor credit Average credit Good credit Excellent credit
State average $6,209 $2,981 $2,309 $2,117
National average $3,873 $1,865 $1,674 $1,487

Best car insurance in Michigan with bad credit

While Michigan drivers with poor credit scores pay an average of $6,209 a year for car insurance, the state average for drivers with good credit is $2,309 — which is a difference of about $3,900. While this difference is significant, it is important to know that your rates will likely not be the same, and that there are things you can do to mitigate higher rates based on your credit situation.

Rates in Michigan may take into account information obtained from your credit-based insurance report — a report unique to insurers which may take into account the same information included in your credit reports issued by the Big Three — TransUnion, Equifax and Experian.

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

  • Poor
  • Average
  • Good
  • Excellent

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

Why does my credit affect my car insurance rates in Michigan?

Studies have shown 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 from the Texas Department of Insurance in 2004 and a Federal Trade Commision study in 2007. The FTC report cited a study by Metlife in which it was found that drivers with low credit scores pose a 50% greater risk to the company. For other types of insurance, such homeowners, the risk was even greater.

For many drivers, improving your credit scores or history will have a direct impact on the cost of car insurance. However, you may not see rates improve immediately upon a credit score improvement. Premiums are typically re-evaluated at the time of your 6- or 12-month policy renewal time frame.

This means that if you improve your credit score, your car insurance provider may not adjust rates until the renewal date is up. Drivers who are looking to get a rate sooner may prefer to switch providers. A new provider will see your most recent credit data and can provide a quote for what your current rate would be.

If you are receiving any loyal customer discounts, however, you may want to think twice about switching if the savings is worth it. Your policy will be up for renewal again eventually, so the benefit of keeping the loyalty discount might play out favorably over the long run. Speak to your current provider to discuss your options to determine which might be the best situation for you.

What other factors impact auto insurance rates in Michigan?

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

  • State or metro: Some ZIP codes receive a much higher amount of claims than others. Whether because of accidents, theft or natural disasters. For example, drivers in Tampa, Florida, pay about $450 more than Orlando, Florida drivers.
  • Vehicle Type: Choose a BMW 330i and you may pay a national average of $2,225 a year for full coverage car insurance. For the Honda Odyssey, rates average just $1,454 annually for full coverage. For Michigan drivers, vehicle choice will also likely correspond to varied rates.
  • Driving history: A DUI conviction in Michigan could get you an increase in your premium of 119% or more. DUIs, or other high risk factors, are often the main contributing factors behind high insurance costs.

How to get cheap car insurance in Michigan with poor credit

Improving your credit standing may help you secure cheaper car insurance in the long run. This is obviously not an immediate process, but it will likely pay out significantly over time. One proactive step you can take is to review the information contained in your credit report for any errors. While mistakes can happen, you may be able to dispute errors and see a sooner improvement on your credit standing.

Besides improving your credit score, you may find cheap car insurance for bad credit in Michigan the same as you would if you had good credit. Adopt the following strategies and the chances of finding a lower premium are greatly improved:

  • Shop around: Some companies do not penalize poor credit as substantially as others. Shop around and compare quotes from several insurance providers and you will likely find one that offers the best rates for the coverage you need.
  • Compare discounts: Though many companies offer similar discounts, the exact savings amount varies by provider. To see how much you could save and which are the best discounts, you may need to speak directly with an agent.
  • Increase your deductible: Most companies offer a variety of deductible options on specific coverages, so you can choose the one that best matches your budget and coverage needs. Increasing your deductible means you will be responsible for more of the repair costs after an accident, so speak with an agent to determine what might fit your needs.
  • Be a responsible driver: Regardless of whether you have bad credit, your driving history plays a huge role in your premium. Staying accident- and claim-free can keep your costs low, and many providers incentivize good driving with discounts that you can qualify for fairly easily.

Frequently Asked Questions

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

You may, but it will not necessarily hurt your credit, as it is considered a soft 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 known as a hard credit check.

Which company offers the best car insurance for bad credit in Michigan?

The best car insurance for poor credit in Michigan depends on each driver’s unique circumstances. The best thing you can do is shop around, knowing that every company weighs the importance of strong credit differently.

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, varied credit tiers and the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverages that meet each state’s requirements. Our base profile drivers own a 2019 Toyota Camry, commute five days a week and drive 12,000 miles annually.

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

Credit: Rates were calculated based on the following insurance credit tiers assigned to our drivers: “poor, average, good (base), and excellent.” Insurance credit tiers factor in your official credit scores but are not dependent on that variable alone. The following states do not allow credit to be a factor in determining auto insurance rates: CA, HI, MA

Written by
Lauren Ward
Insurance Contributor
Lauren Ward has nearly 10 years of experience in writing for insurance domains such as Bankrate, The Simple Dollar, and Reviews.com. She covers auto, homeowners, and life insurance, as well other topics in the personal finance industry.
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