If you have ever opened an insurance renewal and wondered, “How did they come up with this price?” a new Michigan law addresses one particular way insurers are not allowed to answer that question.
In September 2026, Michigan enacted legislation prohibiting insurance companies from using a practice known as price optimization when determining insurance rates. The new law reinforces protections that the Michigan Department of Insurance and Financial Services (DIFS) had already established through regulatory guidance in 2024. Michigan
For homeowners and drivers throughout Traverse City, Suttons Bay, Elk Rapids, Williamsburg, and surrounding Northern Michigan communities, it is worth understanding what this change means—and just as importantly, what it doesn’t mean for your insurance premium.
What Is Insurance “Price Optimization”?
Price optimization sounds complicated, but the basic idea is fairly straightforward.
Insurance premiums traditionally reflect factors associated with the risk being insured and the expected cost of providing coverage. Price optimization instead involves varying a customer’s premium using factors unrelated to the insured’s risk of loss or expense in an effort to determine the highest price that customer may be willing to tolerate.
For example, data analysis might be used to predict how a policyholder has responded to previous premium increases and how large an increase that customer might accept before deciding to shop for another insurance company.
Michigan DIFS specifically identified that type of practice in a March 2024 bulletin and stated that it was not permitted under Michigan law. Michigan
In other words, your insurance premium should not be higher simply because an insurer believes you are willing to pay more.
What Changed in Michigan in September 2026?
On September 21, 2026, Governor Gretchen Whitmer signed Senate Bill 1013, legislation prohibiting insurance companies from setting rates based on a customer’s willingness to pay more. DIFS highlighted the new law on September 23. Michigan
There is an important distinction here.
This does not mean price optimization was acceptable in Michigan until September 2026.
DIFS had already issued guidance in March 2024 stating that price optimization in property and casualty insurance ratemaking was unfairly discriminatory and therefore prohibited. The new legislation puts that protection directly into Michigan law and strengthens DIFS’s authority to enforce the prohibition. Michigan
DIFS reviews rate filings for automobile, homeowners, and other property and casualty insurance to ensure price optimization is not being used.
Does This Mean Your Insurance Premium Will Go Down?
Not necessarily.
The new law should not be interpreted as a promise that Michigan home or auto insurance premiums will decrease.
Insurance rates can still change for legitimate reasons associated with risk and the cost of providing insurance.
For a Northern Michigan homeowner, for example, factors affecting insurance costs can include characteristics of the home, replacement and rebuilding costs, coverage selections, deductibles, claims history where permitted, and other approved rating considerations.
Auto insurance pricing can similarly reflect multiple permitted factors related to the driver, vehicle, selected coverage, and other rating criteria.
The new Michigan law addresses something different: using a customer’s willingness to tolerate a higher price as a reason to charge that customer more.
That distinction matters.
Why Can My Premium Still Increase If Price Optimization Is Banned?
This may be the biggest question consumers have after hearing about the new law.
A prohibition on price optimization does not prevent insurance companies from adjusting rates when the underlying cost of insuring homes, vehicles, or businesses changes.
Consider what has happened to many of the things insurance ultimately pays to repair or replace.
A relatively minor vehicle accident can involve cameras, sensors, computerized components, specialized headlights, and calibration work. Home claims can involve increasingly expensive construction materials and skilled labor.
In Northern Michigan, insurers must also evaluate the risks associated with the properties and vehicles they insure.
So, if your renewal premium increases, the increase itself is not evidence that price optimization occurred.
The important issue is whether rates are based on permitted factors related to risk and expense rather than an insurer’s assessment of how much additional premium an individual customer might tolerate.
What Should Northern Michigan Policyholders Do at Renewal?
The new law is a good reminder that your insurance renewal deserves more than a quick glance at the total premium.
When your home or auto policy renews, look at both the price and the coverage.
Review What Has Changed
Compare your new declarations pages with your previous policy. Look for changes in premiums, deductibles, coverage limits, endorsements, vehicles, drivers, and property information.
If something is unclear, ask.
Make Sure Your Information Is Current
Insurance needs change.
Maybe you renovated your Traverse City home. Perhaps you added a detached garage in Kingsley, bought a vehicle for a new driver in Elk Rapids, started renting out property near Frankfort, or purchased recreational equipment for summers in Northern Michigan.
Those changes may affect your insurance needs, and your agent cannot help address a change they do not know about.
Don’t Evaluate Insurance on Price Alone
Premium matters. But the least expensive policy is not necessarily the policy that best fits your situation.
Deductibles, liability limits, coverage exclusions, endorsements, and optional protections can make significant differences between policies.
A better renewal question is often:
“Does my current coverage still make sense for what I own and the risks I have today?”
What If You Believe Your Insurance Rate Is Being Calculated Unfairly?
Start by asking questions.
Your independent insurance agent can help you understand your policy, identify changes at renewal, and explain the factors that may be affecting your coverage and premium.
If you believe an insurer has used price optimization or another unfair insurance practice, Michigan consumers can also contact the Department of Insurance and Financial Services. DIFS accepts consumer complaints and has stated that it will take appropriate regulatory action against insurers that employ price optimization. Michigan
A Good Time for an Insurance Review
Michigan’s new price-optimization law is an important consumer protection, but it is also a useful reminder of something we encourage our clients to do regularly: understand what you’re paying for.
Insurance pricing is complex, and there is rarely one single reason a premium changes.
At Cardinal Insurance Group, we can help you review your current home, auto, umbrella, or business insurance, explain your coverage in plain language, and identify questions worth asking as your policies renew.
If you live or own a business in Traverse City, Suttons Bay, Elk Rapids, Williamsburg, Acme, Interlochen, Kingsley, Frankfort, or elsewhere in Northern Michigan, contact Cardinal Insurance Group to schedule an insurance review.
Understanding your coverage, and the factors behind it; is an important part of making informed insurance decisions.
Linda M. Fisher, AAI, CIC, CPRIA, CPRM, LIC, LUTCF, TQA
Trusted Guidance. Personalized Service.