Detroit, Michigan has the highest car insurance rates in the US, almost double the national average. Not surprising, when you consider the city has some of the worst crime in the country and is recovering from bankruptcy.
In fact, a recent survey from QuoteWizard found that drivers in Detroit pay $600 more annually on average than their neighbors in Columbus, Ohio. Besides that, they spend $500 more a year than drivers in nearby Chicago, Illinois.
By far, the biggest culprit for Michigan's outrageous insurance rates is the fact that unlimited personal injury protection (PIP) coverage is mandatory. Currently, it's the only state that requires it.
Another reason for Michigan's skyrocketing rates? It's one of 12 states that has a no-fault insurance policy. This type of coverage often leads to higher premiums.
To find out more about how much car insurance in Detroit costs and why rates are sky high, we surveyed 500 drivers. We asked them about their driving history, age, gender, and car make and model. Other compelling facts we found?
- Young Detroit drivers aged 18 to 24 with tickets and accidents paid over $450 more annually than the average driver in the city.
- Detroit residents pay over $400 more a year to insure a new car (2015 to 2017) than a model from 2005 to 2009. Interestingly, it costs $440 more to insure a new car in Detroit than in Columbus.
Read on to find out who pays the cheapest and most expensive car insurance in Detroit, and the best way for you to save in the city with the highest car premiums in the country.
Average Monthly Detroit Car Insurance Rate
Car insurance rates are on the rise across the country. According to a recent AAA study, insurance rates have increased 9.6 percent in 2016. On average, Americans pay $1,222 annually, up $107 from last year.
You can blame falling gas prices for the spike in insurance premiums. Because more cars are on the road, there's a higher chance you'll get into an accident.
Following suit, Detroit's average car insurance rate is $174 a month, or $2,088 a year. That's almost twice the amount for the rest of the country.
Average Monthly in Detroit= $174
The average monthly premium in Detroit is $174, but keep in mind rates can be much higher. This figure most likely reflects the minimum amount of liability insurance required by the state.
Most Detroit drivers probably tend to get the least amount of coverage possible. Although $174 a month is already much higher than what the typical American pays, it may not include optional insurance such as collision and comprehensive policies.
Why would Michigan drivers opt for the minimum coverage? In short, they can't afford anything else. Collision and comprehensive insurance can easily cost $3,000 to $5,000 more a year in D-Town depending on your driving history, location, age, and other factors.
Detroit has a high vehicle-theft rate that keeps on climbing. Auto thefts increased 5.8% in 2016. This of course increases the likelihood that someone will file a claim for a stolen car, escalating insurance rates.
And, as discussed, Michigan is a no-fault state. A no-fault policy means your insurance company will pay for damages regardless of who's to blame for the accident.
According to Claims Journal, no-fault states pay 25 percent more for premiums on average than states with a traditional insurance policy. Ironically, no-fault coverage was initially seen as a way to reduce insurance costs.
Michigan also requires residents to have unlimited PIP coverage. PIP covers medical expenses if you get into a car crash. This can also cover lost wages and replacement services for up to three years.
These are all factors in Detroit's excessive car insurance rates. Because premiums are already so costly, it's unlikely most drivers will want to spend even more than they have to already.
In fact, to avoid paying auto insurance rates that are higher than their rent, some Detroit drivers are opting out of buying car insurance altogether. Driving without insurance is illegal, and can cost around $700 in fines if caught "driving dirty" in Detroit. But with rates climbing past $2,000 a year for minimum coverage, some drivers would rather take the risk than shell out the cash now.
Driving without insurance, however, is illegal with hefty fines and possible jail time. Another way is to compare auto insurance rates from several insurers to find the best deal possible. It may still be expensive, but driving without insurance exposes you to significant risk.
Men = $174
Surprisingly, our survey found that men and women pay the same amount for car insurance, $174 monthly. In general, women tend to pay less because they statistically get into fewer accidents that result in injuries.
But again, this is based on liability coverage. In a different study, we found that the average car insurance premium for Detroit residents opting for liability, collision, and comprehensive insurance was over $500 a month for men.
In Detroit, your gender doesn't have an effect on your car insurance rates if you only buy the minimum insurance required by the state. But when you include costs for collision and comprehensive insurance as well, women end up paying over $100 a month more than men for insurance at $621 a month.
Rates by Age Group
Another factor that insurers look at when calculating your car insurance rate is your age. As you can see above, your age can have a big effect on how much you're charged per month.
Aged 18 to 24 = $202
It's no secret that younger drivers are viewed as some of the highest risk customers for insurance companies. People younger than 25 don't generally have a lot of experience on the road. This inexperience can lead to more frequent accidents and injuries.
Aged 25 to 34 = $150
Thankfully, you won't have to pay outlandish premiums forever. As you get older, you should see a decrease in your rates, typically at age 25. Following this trend, in Detroit you can expect to save over $600 a year on car insurance once you reach your 25th birthday.
Aged 35 to 44 = $169
Detroit drivers will generally see an increase in their rates in this age bracket. Higher premiums could be a result of adding more than one car to a policy.
People in this age group are more apt to be married. They might also have more than one car themselves if they are making more money and can afford it.
Aged 45 to 54 = $180
You'll see another spike in rates in the 45-to-54 age group. Typically, rates are $11 more a month than the previous age group of 35 to 44. This can again be attributed to getting married or buying another car. Other possible factors could be adding a teen to a policy or buying a luxury vehicle.
Aged 55 to 64 = $175
Drivers in Detroit can look forward to lower rates once they reach age 55. They'll save $60 a year on insurance when compared to the next closest demographic, 45- to 54-year-olds. And when compared to the youngest drivers, they'll save over $300 annually.
Why are their rates so much less than 18- to 24-year-olds? They have more driving experience, so insurers deem them as low-risk.
The Real Cost of Tickets and Accidents
Getting into an accident, being pulled over for speeding, or having a DUI on your record can all raise your rates drastically. Case in point, in Detroit, people with a bad driving history pay $324 more a year than those with a clean driving record.
Drivers who reported tickets or accidents = 22%
Average monthly cost WITH tickets or accidents = $196
Average monthly cost WITHOUT tickets or accidents = $169
In Detroit, 22 percent of drivers admitted to getting a ticket or being involved in an accident. These incidents cost them a $27 monthly premium increase.
Rates by Age With Tickets or Accidents
Tickets and accidents mean rising insurance costs at any age. For example, Detroit residents aged 18 to 24 who have a splotchy driving record pay over $450 a year more than the typical driver. And if you're 35 to 54 and have tickets or accidents, you'll pay more than $500 annually than those with a clean record from the same age group.
So if you're looking to save, make sure to drive carefully to avoid increasing rates. After all, these incidents typically stay on your record for three to five years, depending on your state.
Driving a Newer Car Costs More to Insure
In general, it costs more to insure a new car. That's because new cars usually need more expensive parts for repairs and cost more to replace. Detroit is no exception to this rule.
Rates by Age of Car
Driving a newer car will cost you in Detroit. City residents shell out an extra $564 annually to insure a new car (2015 to 2017) than a model from 1990 to 1994. Even if you look at vehicles closer in age, for instance cars from 2015 to 2017 compared to those from 2005 to 2009, you'll find owners will have to pay an additional $408 a year for insurance.
Here too, Detroit's premiums are shocking when compared to nearby cities. To insure a 2015-to-2017 car in Columbus, Ohio, you'll pay $162 a month. That's already $41 more a month than the average driver in Columbus. But to insure a vehicle from the same year in Detroit, you'll have to spend over $440 more a year.
Average Rates by Car Make and Model
Your car make and model also affects your car insurance costs. You can find out the average rate in Detroit for popular vehicles below.
Top 10 most common cars by rate
|Chrysler||Town & Country||$159|
The type of car you drive matters to insurers. Based on this information, your rates can change drastically. You might even be able to pay less than the average Detroit driver.
As you can see above, someone who drives a Chevrolet Silverado in Detroit will pay a whopping $75 more a month than someone else who drives a Honda Accord. That's almost $1,000 more a year.
Most Expensive Makes to Insure in Detroit
Luxury cars are some of the most expensive vehicles to insure. In Detroit, three high-end makes—Mercedes, Cadillac, and BMW—top the list as the most expensive makes to insure.
Luxury vehicles often need to be repaired with specialized, newer parts, driving up the cost of insurance claims. As a result, your monthly premium will cost around $300 more on average than the typical Detroit resident.
Cheapest Car Makes to Insure in Detroit
Looking to save on your car insurance? Try one of the above makes. In Detroit, Nissans take the prize for being the cheapest type of vehicle to insure at about $146 a month. That means you end up saving $336 a year when compared to the average Detroit driver.
GMCs and Hondas follow closely behind Nissans as the cheapest makes to insure in Detroit.
Car Insurance Rates by Top Companies
By now, you know that insurance companies look at a number of factors when calculating your premium. These factors include your age, gender, driving record, car make and model, and the age of your car.
But which car insurance company you choose also greatly affects how much you pay a month. That's because insurers use different formulas when calculating rates. One might increase your premium by $20 because of your age, while another might increase your rates by $40.
This is why shopping around can save you so much money. It's also why you should compare rates with multiple companies not once, but every year or so. That's the best way to find the cheapest car insurance company for your coverage needs.
We looked at the average rates by age group from six of the top insurance companies in Detroit. You may be surprised by the huge rate discrepancies we found when comparing insurers.
Rates for 18-24 Year Olds
As we mentioned, 18- to 24-year-olds pay some of the highest rates no matter what city they live in. But in Detroit, they're apt to pay even more. Still, if you do your homework and shop around, you can be sure you're spending the least possible.
For instance, Progressive charges drivers in this age group $151 a month, as compared to GEICO, which charges an average premium of $240 a month. Progressive customers pay less than the average Detroit driver ($174). But drivers who choose Geico over Progressive wind up spending $1,068 a year more.
Rates for 25-34 Year Olds
Just because you found the cheapest rates for your age group at 23 doesn't mean you've found the insurer you should stick with for life. Unfortunately, loyalty doesn't often mean cheaper rates in the car insurance industry.
As we saw, Geico charged the youngest Detroit drivers an astounding $240 a month. But for this age group, the company drops down to a $145 a month premium. In fact, they end up being a cheaper option than Progressive, who offered the lowest rates for 18- to 24-year-olds.
Still, no matter what company you end up with you'll save on your car insurance as you get older, even if you go with the most expensive company.
Rates for 35-44 Year Olds
Drivers aged 35 to 44 who want to save should opt for Farmers insurance. This company charges a remarkable $74 less for coverage in this age group than what the average Detroit driver pays.
Interestingly, Allstate, which offered the cheapest insurance option to those aged 25 to 34, now jumps up to offering the highest premium at $200 a month.
Rates for 45-54 Year Olds
State Farm and Farmers both offer reasonable rates for this demographic. At $155 and $156 a month, these companies will save you over $200 a year when compared to the average driver's insurance rates in the city.
Rates for 55-64 Year Olds
Drivers aged 55 to 64 can be thankful they have some of the lowest premiums in the city. While State Farm and Farmers jump up again in this demographic, Geico stands out as the best option from a savings point of view.
Choosing Geico over Farmers for instance will save you over $1,000 annually. Even the next cheapest option, Liberty Mutual ends up costing $660 a year less than Farmers.
What makes an insurance company customer-friendly? Good customer service, knowledgeable agents, and of course reasonable rates.
In Detroit, State Farm is the best-rated insurer, followed by Progressive. While State Farm didn't always offer the cheapest premiums, it didn't appear as the highest option in any age group. Progressive also offered low to medium priced coverage, with the exception of 45- to 54-year-olds.