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Detroit — Mayor Mike Duggan on Wednesday unveiled a plan to allow auto insurance companies to sell Detroiters lower-cost policies with a maximum of $275,000 in medical coverage for auto-related injuries.

Duggan's long-anticipated proposed legislation, which he said would knock $1,000 off motorists' annual bills next year if passed, would provide $25,000 in base benefits for personal-injury protection and another $250,000 for catastrophic care for disabling injuries from in auto accidents.

"We have worked at this every single day for the last year," Duggan told a packed community meeting at Little Rock Baptist Church on Woodward. "This is the most complicated thing I've dealt with in my life."

The mayor's "D-Insurance" plan, to be sponsored by state Sen. Virgil Smith, has been among Duggan's priorities for Detroit and fulfills a campaign promise to craft the strategy. The policy gives Detroiters an option that he said would cut auto rates 25 percent to 33 percent.

"I want you to have a choice. That's all I'm saying," the mayor told the crowd while explaining the proposal. "If this doesn't work, I don't have another solution. We've got to get this through."

Duggan said he's been pitching his plan to the Republican speaker of the House and Gov. Rick Snyder is "largely on board." They are now working on the Senate, he said.

The mayor said they will work to get Smith's bill passed this year.

Detroiters spend, on average, $3,400 annually on insurance some of the highest auto insurance premiums in the country. Suburban drivers in Michigan average $1,700.

Duggan said Wednesday his own rates doubled from $3,000 to $6,000 when he moved to the city from the suburbs.

More than 50 percent of Detroit drivers are uninsured, he said. The result is they are "left vulnerable."

Under Duggan's plan, when motorists hit the $275,000 cap, they would have to get additional coverage from health insurance plans. The draft bill also allows insurers to set up limited-provider networks for nonemergency treatment, such as physical rehabilitation or occupational therapy.

The proposal, which would need approval of the state Legislature, is a departure from Michigan's decades-old unlimited medical benefits for drivers who sustain life-altering injuries in crashes. Insurers often blame a lack of cost controls in auto accident medical care for Michigan's above average insurance rates.

Also, Smith said he will be holding a committee hearing and substitute in Duggan's language in place of the language in his existing bill.

Tahjma Vaughn said she and her husband pay $460 a month for basic no-fault coverage for their two vehicles.

The 22-year-old said the costs doubled when she moved to the city from Troy last year.

"We were struggling. I was in tears trying to find out how we were going to pay for insurance," she said.

Vaughn said she was glad to hear that the mayor has a strategy, adding that many on her block can't afford car insurance.

"I want to try to look into this," she said. "Hopefully help my neighbors and people in our area."

If the bill goes through, Duggan said the city will select at least two companies to offer D-Insurance through competitive bidding.

In recent months, Duggan said he's been working with AAA Michigan to evaluate why city residents were paying higher premiums. The reason, Duggan has said, has less to do with thefts or accidents and more for medical follow-up care. Before becoming mayor last year, Duggan was president and CEO of the Detroit Medical Center.

In November, the City Council unanimously supported a $75,000 contract with an actuarial firm to study the feasibility of creating a city-sponsored insurance company.

Reforming the state's auto no-fault law has been a priority for Snyder, who has said he's working with Duggan on legislation to bring rate relief to Detroit residents.

Duggan's efforts to lower auto insurance rates in Detroit comes as the state House is preparing to vote as early as this week on a controversial bill to curtail medical costs for auto insurers and provide motorists with up to $100 per vehicle annual rate reduction for two years.

Last week, Smith proposed a bill that would lower the city's high auto insurance rates by letting insurers sell basic auto coverage in Detroit with just $50,000 in medical coverage.

Smith said his focus will now be on introducing Duggan's insurance plan.

"I know we can get this done," Smith said at Wednesday's meeting.

Smith has said if city residents are willing to forgo unlimited lifetime medical benefits for auto accidents, it could drive down the cost of insuring vehicles in the city.

Drivers in Detroit's 48227 ZIP code pay the highest auto insurance premiums in the country for a 2014 Honda Accord at $5,109 per year, 130 percent more than the statewide average for that particular vehicle, according to a January study of average rates by CarInsurance.com.

cferretti@detroitnews.com

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