Rates for auto insurance in Michigan are regulated by state law. They must remain competitive, which means an insurance company cannot offer rates considered excessively high. As long as there is competition among the insurance companies within the state, the rates are considered legal. Any insurance company can offer a variety of services and rates and currently there are over 60 that offer Michigan car insurance.Insurance companies are not allowed to talk to each other about the rates they are setting for customers. This is considered illegal because if they could communicate about the rates, they could all offer higher rates and there would still be competition. There are strict penalties associated with breaking the law when setting insurance rates and they can include jail time for the individuals involved.
The Two Types of Car Insurance Policies Offered in Michigan
There are two basic types of car insurance policies that nearly every company offers: non-group (individual) and group. These types of polices are a bit different and come with different rates. Typically, the coverage offered within both non-group and group policies are very similar, but all auto insurance companies are different.A group policy is offered to members of a specific association. This could be employees of a company, members of an auto club or any other group looking for car insurance in Michigan. This differs from what most insurance customers are used to, as they are most familiar with the non-group or individual policies that companies offer.
The laws of the state of Michigan give insurance companies the ability to use rating factors when figuring auto insurance rates. They allow more of these rating factors for group policies compared to non-group policies. These rating factors include things like the type of vehicle you own, how old you are, how long you have been driving, where you live and your driving record. You can also earn discounts for carrying multiple policies with the same company.
There are many other rating factors a company can use and many other discounts they can offer. Most auto insurance companies in Michigan offer discounts for anti-theft systems, automatic seat belts, good driving records, good grades (if enrolled in high school or college) and many other things. The right agency will work hard to make sure you receive every discount you qualify for.
How a Michigan Car Insurance Company Comes Up with Your Premium
By weighing the different risk factors, along with the amount of money, they estimate it would cost to pay for injuries and repairs due to an accident; the insurance company comes up with the amount you pay annually for coverage. These costs can vary from one year to another based on how many claims an insurance company pays out, how well you drive that year and many other rating factors.This variation in insurance rates is why most insurance companies only offer policies with a length of 6-months to one year. With such a short policy, they can easily re-evaluate each individual or group policy whenever necessary and make adjustments as they see fit. If they receive a large amount of claims one year and pay out more money than they expected, they can raise the rates of all the policies, if necessary.
The law requires that all Michigan car insurance companies provide a description of your rating classifications at least once a year. This will include all the factors they used to determine your specific premium. They must also provide this description whenever you renew your policy and each company must also give you a specific process to use if you believe your premium is incorrect for any reason whatsoever.With this process, any consumer that feels they are being charged an incorrect rate, based on the rating classifications provided, can request a review of the rate by their insurance company. If you still believe your premium is incorrect, you can contact the Financial and Insurance Regulation and they can review your policy to make sure your rate is correct.
Quite a bit goes into the actual figuring of the premium charged for anybody driving an insured vehicle in Michigan. The law is written to protect both the consumer and the Michigan auto insurance companies, along with ensuring there are many different options you can choose for your Michigan car insurance needs.
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