Car insurance in Detroit continues to be a racket.

**brizee** · February-05-14, 12:00 PM

http://www.nerdwallet.com/blog/insur...car-insurance/

Which should come as a surprise to exactly nobody.

Duggansurance can't get here quick enough.

**softailrider** · February-05-14, 12:11 PM

It's a consideration to anyone who wants to move to any area of the city. Their rates are probably going to triple.

**Hamtragedy** · February-05-14, 12:11 PM

"Detroit’s annual insurance premiums are not uniformly high. We found that even within neighborhoods, Detroit’s annual insurance premiums varied greatly. In the Rosedale Park neighborhood, State Farm offers a policy for $25,300 a year, while Hanover offers insurance for a fraction of the price at $4,854."

I've noticed this before. How is it legal?

**313WX** · February-05-14, 12:13 PM

That's part of the reason behind Detroit's rapid drop in population too.

We may very well have 800,000 to 1,000,000 people "bunking" in the city, yet they claim residence in the suburbs for cheaper car insurance rates [[for example, many of the suburbanites who are apparently moving downtown).

**DetroitPlanner** · February-05-14, 12:27 PM

Originally Posted by 313WX

That's part of the reason behind Detroit's rapid drop in population too.

We may very well have 800,000 to 1,000,000 people "bunking" in the city, yet they claim residence in the suburbs for cheaper car insurance rates [[for example, many of the suburbanites who are apparently moving downtown).

And cheaper income taxes as well.

**motz** · February-05-14, 01:02 PM

Originally Posted by DetroitPlanner

And cheaper income taxes as well.

Its not the income taxes that keep anyone I know from claiming residency in the city. The income tax is, at best, a small tax to live where you want to... The problem is tripling, sometimes even more than that, car insurance. That is a VERY serious issue for a lot of people. If you do the math, a student who chooses to live near WSU's campus with several friends in say, a 2-4 bedroom apartment... if they claim residency in Detroit and have coverage on their car, sometimes that coverage is going to cost them more a month than their rent. Taxes are nothing compared to that.

**Honky Tonk** · February-05-14, 01:09 PM

Originally Posted by motz

Its not the income taxes that keep anyone I know from claiming residency in the city. The income tax is, at best, a small tax to live where you want to... The problem is tripling, sometimes even more than that, car insurance. That is a VERY serious issue for a lot of people. If you do the math, a student who chooses to live near WSU's campus with several friends in say, a 2-4 bedroom apartment... if they claim residency in Detroit and have coverage on their car, sometimes that coverage is going to cost them more a month than their rent. Taxes are nothing compared to that.

The real question is: IS it a racket, or is it because of the crime factor? Either way, Detroit is losing either residents or tax revenue from people who actually live here, but live elsewhere on paper.

**softailrider** · February-05-14, 04:57 PM

Of course it's a racket. I don't mean to sound coarse or unkind but insurance companies are some of the biggest whores on the planet.

**JBMcB** · February-05-14, 05:38 PM

Originally Posted by Hamtragedy

"In the Rosedale Park neighborhood, State Farm offers a policy for $25,300 a year, while Hanover offers insurance for a fraction of the price at $4,854."
I've noticed this before. How is it legal?

Because different things from different companies cost different amounts?

**jt1** · February-05-14, 05:53 PM

Originally Posted by JBMcB

Because different things from different companies cost different amounts?

I can understand discrepancies but, when the prices are supposed to be set by actuarial data, there is no way to explain one quote being 6 times higher than the other.

The state doesn't give a shit and they do not audit any data [[or request it) to verify that the rates being charged are based upon actuarial data.

The only state requirement is that, to do business in michigan, a company must offer insurance to all people in the state. If you don't want to do business in Detroit you can still satisfy the weak Michigan requirement by offering insurance to the tune of 25K per year.

The Office of Financial and Insurance services is nothing but a rubber stamp when they should be structured as a consumer protection organization.

**ccal** · February-05-14, 05:59 PM

Originally Posted by jt1

I can understand discrepancies but, when the prices are supposed to be set by actuarial data, there is no way to explain one quote being 6 times higher than the other.

The state doesn't give a shit and they do not audit any data [[or request it) to verify that the rates being charged are based upon actuarial data.

The only state requirement is that, to do business in michigan, a company must offer insurance to all people in the state. If you don't want to do business in Detroit you can still satisfy the weak Michigan requirement by offering insurance to the tune of 25K per year.

The Office of Financial and Insurance services is nothing but a rubber stamp when they should be structured as a consumer protection organization.

I'm not being sarcastic when I ask this,but how can something like this go on legally?

**jt1** · February-05-14, 06:04 PM

Originally Posted by ccal

I'm not being sarcastic when I ask this,but how can something like this go on legally?

Because the state has no oversight and does not want any oversight. Their only requirements for an insurance company to do business in the state is that they offer insurance to the entire state. They don't review or approve rates or request any data to justify rates.

It is complete garbage but that is how the OFIS runs. Call and ask if they get any actuarial data from the insurance companies. They will flat out tell you they do not and they do not request it.

When digging into it at the State level I was told that the consumer is protected from redlining because they have multiple options and need to research the best rates in their area. I thanked them for the wonderful laugh and went on my way.

**Dan Wesson** · February-05-14, 06:34 PM

Insurance a racket? Is a Casino a racket? Are Interest rate swaps a racket?
Is the hardware store that sells snow blowers with the deal that if it don't snow during the season you get the blower free a racket.

Insurance is a bet. Your betting that something happens to your car and the Insurance company is taking the other side of that bet. Their actuarial departments got the odds on these bets down to a science.

**jt1** · February-05-14, 06:43 PM

Incorrect. It is not required that people go to casinos or any entity enter into interest rate swaps. Consumer purchases or store promotions also aren't required.

To drive it is required that you have insurance. The problem with your statement about the actuarial departments is that there is no proof or oversight that the insurance companies are applying actuarial data when setting rates.

I have had quotes that ranged from X to 8X for the same coverage, in the same home on the same car. Those results certainly do not arise from actuarial data. Those rates arise from either redlining or a company unwilling to do business in the city so they charge rates so absurd nobody would purchase their services.

This, from an industry that is supposed to be regulated by our state. I'm sure people would be up in arms if DTE started charging people in the boonies 10 times as much but presented no evidence to justify it.

Insurance should be regulated the same as utilities. People in suburbia get their panties in a bunch if their water bill goes up $2 but Detroiters are just supposed to accept the fact that insurance companies are operating ethically.

Give me a break.

**Dan Wesson** · February-05-14, 06:57 PM

Good points jt1. What you want is to have the risk spread over a much larger geographic area.

And yes...

I have had quotes that ranged from X to 8X for the same coverage, in the same home on the same car. Those results certainly do not arise from actuarial data. Those rates arise from either redlining or a company unwilling to do business in the city so they charge rates so absurd nobody would purchase their services.

They don't wanna take that bet.

This, from an industry that is supposed to be regulated by our state. I'm sure people would be up in arms if DTE started charging people in the boonies 10 times as much but presented no evidence to justify it.

If I remember right it used to be that way.

If you don't think that there is no proof that they are " applying actuarial data" and more check these out here, here and here.

**antongast** · February-05-14, 07:50 PM

Originally Posted by Dan Wesson

Is a Casino a racket?

Yes.

Originally Posted by Dan Wesson

Are Interest rate swaps a racket?

Yes.

Originally Posted by Dan Wesson

Is the hardware store that sells snow blowers with the deal that if it don't snow during the season you get the blower free a racket.

No.

**Richard** · February-05-14, 08:20 PM

As for the most expensive cities, Detroit's car insurance rates exist on a separate plane from the rest of the country, with a price tag more than double the next most-expensive locale. Michigan requires insurers to offer unlimited medical benefits, which pushes up rates to begin with. Detroit's high rate of auto thefts and overtaxed police force add to insurers' worries as well.

http://autos.yahoo.com/blogs/motoram...140007754.html

Link has a comparison chart,Detroit does rank #1.

**Dan Wesson** · February-05-14, 08:39 PM

The only way I have found to get out of the high rates is to not have the bank as a co-owner forcing you to get full coverage. Pay cash for a jalopy and get pl-pd only and not pay monthly.

**mwilbert** · February-05-14, 09:46 PM

http://autos.yahoo.com/blogs/motoram...140007754.html

I have to question their method of calculation.

Without disagreeing that Detroit auto insurance rates are really high, does anyone on this board who insures in Detroit pay more than $800/mo for insurance for a car like a two year old Camry? My experience [[admittedly with an older car) is maybe a third of that.

**Cincinnati_Kid** · February-05-14, 09:59 PM

Get rid of No Fault Insurance and the rates will go down.

**nain rouge** · February-05-14, 10:01 PM

Even a third of $800 is way too much in a state where the average per capita income is $25,000. At a third of $800, you'd still be putting about 10% of your income toward car insurance. That's INSANE, and part of the reason why people in Michigan feel "overtaxed", even though our cost of living is supposedly low. Throw in the cost of gas for commuting in one of the most sprawled out job markets in the country and you may as well live in your car.

**Zacha341** · February-06-14, 04:01 AM

I do something like that. I purchase my cars used, run full coverage the first year or two, then ditch down to no fault. It's ultra expensive to do a car 'note' and full coverage combo in the D.

Originally Posted by Dan Wesson

The only way I have found to get out of the high rates is to not have the bank as a co-owner forcing you to get full coverage. Pay cash for a jalopy and get pl-pd only and not pay monthly.

**Zacha341** · February-06-14, 04:06 AM

I've heard of insane rates but that seems high for a Cam though the XLE the highest level class for that model would be higher. I have a much decidedly older car. Driving older has been the edge. Try using an insurance broker to get out of the ULTRA expensive insurances, like 3As, Alstate, State Farm etc. Maybe try Citizens.

Originally Posted by mwilbert

I have to question their method of calculation.

Without disagreeing that Detroit auto insurance rates are really high, does anyone on this board who insures in Detroit pay more than $800/mo for insurance for a car like a two year old Camry? My experience [[admittedly with an older car) is maybe a third of that.

**Honky Tonk** · February-06-14, 04:20 AM

Originally Posted by softailrider

Of course it's a racket. I don't mean to sound coarse or unkind but insurance companies are some of the biggest whores on the planet.

Maybe, but Detroit is one of, if not thee, most crime ridden Cities in the country. People take cars and parts like picking apples off of trees. That coupled with the fact that the "other guy" probably isn't covered, what can one expect?

**Hermod** · February-06-14, 05:15 AM

If the market is that unregulated and rates are too high based on perceived exposure so that companies writing in Detroit are making obscene profits, there would be a lot of other insurance companies coming into the market to undercut those profits.

I pay much higher rates here in South Florida than I did in the Tidewater Virginia. I recognize that this is because Sofla is the insurance fraud capitol of the US and that thieves can have my car in a container heading for Latin America is fifteen minutes.