Coalition seeks lower auto insurance rates in Detroit

Nicquel Terry
The Detroit News

Detroit — A coalition of city leaders has launched an effort to lower auto insurance rates for Detroit residents, saying costs within the city are significantly higher than what motorists pay in the suburbs.

The Detroit Alliance for Fair Auto Insurance announced Monday it would lobby for lawmakers to make reforms to Michigan’s auto no-fault system to protect drivers in Detroit.

Former state Rep. Brian Banks said there is no accountability for how much insurance companies charge people.

“Insurance companies, they’re gouging us,” Banks said during a news conference Monday at Salem Memorial Lutheran Church. “And we’re not going to stand by and allow them to do that.”

Banks said Detroiters are paying up to $5,000 a year to insure a single vehicle. That price, he said, is “extremely high” compared to other cities in Michigan and the country.

The alliance has earned the support of several elected officials, including Councilwoman Brenda Jones, as well as pastors and residents.

Pastor Darrell Reed of Spirit of Love Church said it’s unfair auto insurance companies use non-driving related factors to determine rates. For example, he said a person’s credit score should not impact his or her auto insurance rate.

“Credit scores does not tell the story when it comes down to a person applying for insurance, whether they are a safe driver or whether they are a dangerous driver,” Reed said. “These things have to stop.”

Andre Walker, president of the Ninth Precinct neighborhood, accused insurance companies of “redlining” Detroit residents. In the city, 39.3 percent of residents live below a poverty line of $24,008 for a family of four.

Walker said motorists who move outside the city limits see their insurance rates cut in half.

The Insurance Alliance of Michigan, which represents most insurance providers in Michigan, released a statement Monday backing the group’s push to reduce auto insurance rates.

The alliance said it’s advocating for lawmakers to set a rate schedule for medical procedures so Michigan residents can determine what plan is most affordable for them. Current state laws mandate lifetime unlimited medical benefits under all auto insurance policies which keep costs high, said Pete Kuhnmuench, executive director of the alliance.

“From Detroit to the Upper Peninsula, consumers are demanding reform to Michigan’s outdated, broken no-fault auto insurance system,” Kuhnmuench said in the statement. “IAM urges lawmakers from both parties to heed the call of Mayor Mike Duggan by rolling up their sleeves, getting to work and passing reforms that make auto insurance more affordable.”

Still, since insurance companies are allowed to use “territorial ratings” residents living in high-risk areas, such as Detroit, will pay more, Kuhnmuench said. High crime, dense populations and more traffic on the road increase risks, he said.

If lawmakers eliminate territorial ratings, residents in suburbs, or less risky areas, will pay more.

“I don’t think it would go anywhere because people don’t want to subsidize others,” Kuhnmuench said. “It just simply costs more to insure a vehicle in an urban center.”

Several Detroit residents attended the news conference Monday to express their support for the Detroit Alliance for Fair Auto Insurance.

Ruby Riley, 66, said she hasn’t driven her own car since 2015 because she can’t afford the insurance. After getting into an accident on I-75 in 2014, Riley said her auto insurance was up to about $150 per month.

Now she rides the bus or rents vehicles on the weekends.

“They are just getting rich off us and it’s ridiculous,” Riley said. “We should have the same rate as across Eight Mile.”

Evelyn Fisher, 58, said she has a car but can’t drive it because the auto insurance isn’t affordable. An insurance company quoted her $3,000 for six months, Fisher said.

“I don’t think it’s fair,” Fisher said. “I hope we get it (rate reforms) done and I hope we get it done soon.”

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Twitter: @NicquelTerry