Michigan Drivers Get Few Breaks for Staying Off the Roads But Get Punished for Job Title and Other Socioeconomic Characteristics
Lansing – Auto insurance companies provide much smaller discounts to low-mileage customers in Michigan compared to the rest of the country, according to a new report published by InsuranceQuotes.com. The national study shows that the premium difference between Michigan motorists who drive 5,000 miles per year and those driving 15,000 miles is only 3.5% compared with countrywide average difference of 8.4%.
As one insurance expert, John Espenschied, told InsuranceQuotes.com, “More miles driven simply means a higher potential of being involved in an accident, which means you’re going to pay more for insurance.” However, because state rules governing auto insurance prices and insurance company practices differ from state to state, the impact of mileage on customers’ premiums varies widely.
“If you drive significantly less each year, you should pay significantly less for auto insurance,” said Douglas Heller, an independent insurance expert who has conducted research for the Coalition to Protect Auto No-Fault (CPAN). “Unfortunately in Michigan, cutting back on your driving hardly puts a dent in your premium while in other states it can save twice as much or more.”
Heller noted that the weak discounts offered in Michigan should be contrasted with the substantial penalties that several auto insurers place on drivers for socioeconomic factors that have nothing to do with their driving, including their job title, level of education, and home ownership status. In a report released earlier this month, CPAN pointed to rate increases as high as $1,000 per year for good drivers solely due to their socioeconomic status.
“A lot of working families have lowered the number of miles they drive every year because they can’t afford the gas or the time off work, but they don’t see commensurate savings on their insurance,” said Heller. “On the other hand, they pay higher premiums because they work in a blue collar job, don’t have a college degree or don’t own their home.”
According to the InsuranceQuotes.com report, motorists in Michigan who drive 5,000 miles per year only saved $43 compared with those driving 20,000 miles. Californians’ premiums dropped by $209 for the same lower mileage driver. Under California law, insurance companies must emphasize a driver’s safety record and annual mileage as the two most important factors in pricing auto insurance.
“Rates in Michigan would come down for many drivers, and more people would be able to afford coverage, if the state demanded that insurance companies place more of an emphasis on driving related factors like annual mileage and less on factors that have nothing to do with driving,” said Heller. “Since the government requires that every Michigan driver purchase auto insurance, there is a special duty to make sure the companies selling it are pricing it reasonably.”