Detroit Auto Insurance Study

**dmike76** · November-19-14, 10:18 AM

Good to see Duggan is still pushing for this. I was worried that it was going to get lost in the shuffle with everything going on. I hope this ends up being a viable insurance option.

http://www.crainsdetroit.com/article...-car-insurance

**sumas** · November-19-14, 11:05 AM

I am with you dmike. Our car insurance more then tripled in the past year alone with zippo claims. One more Detroit slam down. Really hope young people move in, insurance costs slow down our city revival.

**Wesley Mouch** · November-19-14, 11:24 AM

Having paid Detroit rates for many years, I agree this is one of the biggest impediments to Detroit. And the side-effect is that many Detroit resfaiidents do not report themselves as such, to avoid these rates. Thus, this also artificially depressed Detroit Income Tax collections.

Good luck, Mayor Duggan.

This is a hard battle. Detroit rates are unfair because they single out Detroit residents and not Detroit drivers for the actual costs of Detroit insurance claim payments. The insurance companies would probably be quite happy to avoid Detroit residents. The real risk for them is that this idea could catch on. That's an existential threat to the insurance companies. Imagine if Chicago, or an entire state decides that insurance can be socialized and run by the government.

This initiative might get the insurance companies to understand that their rates should not rely so heavily on garaged residence, but on broader habits. Also, I hope the advocates for unlimited medical understand the unintended consequence. High rates in Michigan in general have helped hurt Detroit residents in their efforts to join the middle class and have contributed to wealth inequality by effectively penalizing Detroit residents.

**EastsideAl** · November-19-14, 12:21 PM

Oh I do hope this comes to fruition. A nice finger to the eye of the rapacious insurance companies and the damage they do to our economy and our economic prospects, as Wesley so nicely pointed out above.

The situation is beyond insane. When I'm home my car is in a guarded garage, I drive well under 10,000 miles a year, have no points on my record, haven't made an insurance claim since the late '80s, decent credit, etc., and yet I pay nearly 3 times what my cousin who lives in Brooklyn [[where he doesn't really even need a car, unlike here) and parks on the street pays.

**Wesley Mouch** · November-19-14, 02:22 PM

Originally Posted by EastsideAl

Oh I do hope this comes to fruition. A nice finger to the eye of the rapacious insurance companies and the damage they do to our economy and our economic prospects, as Wesley so nicely pointed out above.

The situation is beyond insane. When I'm home my car is in a guarded garage, I drive well under 10,000 miles a year, have no points on my record, haven't made an insurance claim since the late '80s, decent credit, etc., and yet I pay nearly 3 times what my cousin who lives in Brooklyn [[where he doesn't really even need a car, unlike here) and parks on the street pays.

Having contributed thousands to insurance companies for the privilege of garaging in Detroit, I share you ire for the Insurance Companies.

But this really isn't the big bad insurance industry screwing Detroit. This is regulation failing Detroit. On a national and state level, insurance is required to do certain things. And allowed to do certain things. Every company has too cover some things, and use certain factors as the basis for their rates. This is not a free-for-all feeding frenzy, but a highly regulated market.

If you want change, this will require Lansing and Washington to prohibit redlining by zip code, for example.

Its also important to keep in mind that the rates are high because the payments are high. Insurance is a 'lottery' for some. If you don't think so, spend some time in court on an auto-injury liability case and see how that changes your thinking. Regardless of your politics, the payments are real. So either we reduce the payments to some -- or we spread the insurance risk throughout the state. And that ain't gonna go down well.

Duggan's ploy here is to scare the insurance companies into some bargaining. If he scares them enough, I think they'll start lobbying for reform that will end up with suburbanites and out-staters sharing in some of the liability for Detroit insurance payouts... and get everyone to the table to talk insurance reform state-wide.

This is a big thing he's doing. And I think there are few others who could pull this together. This is what you get when you vote for competence instead of pandering. Detroit voters pay attention, please -- because your lives can really get better if you leave the blame game and start sharing the world with your vision of new ways of doing business.

**Hermod** · November-19-14, 03:52 PM

Insurance is priced on the basis that premiums = cost of claims + overhead expense + some level of profit [[I assume we all agree that there should be some profit for the companies and that their employees should get paid). Insurance is regulated to that extent. How big should any casualty and liability insurance pools be? Should it be nationwide? statewide? countywide? How much should companies be allowed to slice and dice the insurance pools? The companies need a lot of low risk folks to cover for any high risks they take on. USAA [[a fairly liberal company) refused for many years to do business in Taxachusetts or to insure any vehicle with MA plates.

**jt1** · November-19-14, 04:08 PM

Insurance is priced on the basis that premiums = cost of claims + overhead expense + some level of profit

Well, sure, except in the state of Michigan there is no requirement that the actuarial data has to be supplied to the State or local governments. Insurance companies submit their rates and are approved on one condition: They offer coverage in the entire state.

There is a total of zero auditing done and zero actuarial data supplied so the free market/rational market is an assumption at best.

**belleislerunner** · November-19-14, 04:20 PM

Are insurance premiums higher in Detroit? Yes.

Are they inhibiting growth? Let's be real.

My SUV full coverage in Royal Oak for six months was $600. In Detroit, it's $1,000. I'm hardly going to make a quality of life decision [[i.e. Detroit vs. Royal Oak) off a $400 insurance bill.

**sumas** · November-19-14, 05:16 PM

yes. get real, how many young people have $2000 to throw around per annum. Insurance rates are insane. We need to attract not detract people from investing in Detroit. We are secure enough to own, love/maintain our home, insure what we have, but young people starting out ?????

**Shai_Hulud** · November-19-14, 06:42 PM

Originally Posted by belleislerunner

Are insurance premiums higher in Detroit? Yes.

Are they inhibiting growth? Let's be real.

My SUV full coverage in Royal Oak for six months was $600. In Detroit, it's $1,000. I'm hardly going to make a quality of life decision [[i.e. Detroit vs. Royal Oak) off a $400 insurance bill.

That's a low premium. In a bigger household, with bad credit or multiple claims that could be $1,000 policy in the suburbs, which is then an $1,800 policy in the city.

The situation is the same for homeowner's insurance as well, add that to city income tax and property tax, and yes, inflated costs with no value are inhibiting growth in the city.

**Hermod** · November-19-14, 07:49 PM

Originally Posted by belleislerunner

Are insurance premiums higher in Detroit? Yes.

Are they inhibiting growth? Let's be real.

My SUV full coverage in Royal Oak for six months was $600. In Detroit, it's $1,000. I'm hardly going to make a quality of life decision [[i.e. Detroit vs. Royal Oak) off a $400 insurance bill.

Here in South Florida, I pay $4,800 per year for three cars and full coverage [[every other billboard is for chiropractors or lawyers looking for "victims" to assist).

**Hermod** · November-19-14, 07:52 PM

Originally Posted by sumas

yes. get real, how many young people have $2000 to throw around per annum. Insurance rates are insane. We need to attract not detract people from investing in Detroit. We are secure enough to own, love/maintain our home, insure what we have, but young people starting out ?????

Get like-minded people together and open the DetroitYes Mutual Insurance Exchange. That is what Army officers did in the 1920s when they couldn't get insurance at the base they were stationed at. The result is USAA.

**rb336** · November-19-14, 09:06 PM

The big issue is that the extortion-like rates for Detroit drivers create a HUGE pool of the uninsured, which jacks up the rates for all of us. The car thefts in Detroit are more than likely either insured suburban drivers or people with basic insurance.

**ronaldj** · November-19-14, 10:09 PM

And let us not forget our friends with the friendly gekko, GEICO, Government Employees Insurance Company. Where's Flo when we need her?

**SyGolden48236** · November-19-14, 10:37 PM

If you live in the tri-county area, but not in Detroit proper, you are penalized with the so-called "Detroit Effect". We live in Wayne County, not in Detroit, and have to pay for the sins of the inner city in our insurance rates. I just paid an annual insurance bill two weeks ago for for 5 cars, for my wife, I, our two children, and a collector vehicle that is driven less than 1,000 miles per year, and it was just over $4,200. My insurance agent bluntly told me the reason for the exorbitant premiums was because we live in a town adjacent to Detroit. I could insure the same vehicles at my other address up north for about half of what it costs down here. As I do not want to commit insurance fraud I will not do so. But it is ridiculous that we have to pay for the sins of a city that we almost never go into.

**Hypestyles** · November-19-14, 10:37 PM

I want to pay half of the $300 per month that I'm paying now, with no accidents. I am very aggravated.

**SyGolden48236** · November-19-14, 10:38 PM

If you live in the tri-county area, but not in Detroit proper, you are penalized with the so-called "Detroit Effect". We live in Wayne County, not in Detroit, and have to pay for the sins of the inner city in our insurance rates. I just paid an annual automobile insurance bill two weeks ago for for 5 cars: for my wife, I, our two children, and a collector vehicle that is driven less than 200 miles per year, and it was just over $4,200 with no tickets and no claims for anyone in the family. My insurance agent bluntly told me the reason for the exorbitant premiums was because we live in a town adjacent to Detroit.

I could insure the same vehicles at my other address up north for about half of what it costs down here. As I do not want to commit insurance fraud, I will not do so. But it is ridiculous that we have to pay for the sins of a city that we almost never go into.

Homeowner's insurance is another issue altogether. Because we are close to Detroit our homeowner's policy is over $3,500 per annum with never a single claim. We have ample protection and security measures and still are raked over the coals for living close to Detroit.

**belleislerunner** · November-20-14, 08:48 AM

"I want to pay half of the $300 per month that I'm paying now, with no accidents. I am very aggravated."

That's $1,800/six months - now that's high - for a clean record. Who is your carrier? I just comparison shopped about 2 months ago and found Allstate to be the cheapest for District 5.

My boss tells me there are 20 factors that go into insurance premiums. Your credit score accounts for 18 of those - so that's really only of the largest drivers.

Pay bills on time, live within your means - the keys to improving it and the quality of your life.

**Wesley Mouch** · November-20-14, 10:20 AM

Originally Posted by belleislerunner

"I want to pay half of the $300 per month that I'm paying now, with no accidents. I am very aggravated."

That's $1,800/six months - now that's high - for a clean record. Who is your carrier? I just comparison shopped about 2 months ago and found Allstate to be the cheapest for District 5.

My boss tells me there are 20 factors that go into insurance premiums. Your credit score accounts for 18 of those - so that's really only of the largest drivers.

Pay bills on time, live within your means - the keys to improving it and the quality of your life.

Now I think the left's obsession with 'income inequality' is nothing but a new name for the blame someone else game... but isn't credit score here a proxy for wealth? To charge less wealthy people more for insurance seems inappropriate, even if there is a strong correlation between wealth and insurance claims. The point of insurance is not to recover all statistical costs from the payers. It also is to cover events that are outside of our control, too. While there is no doubt a correlation between wealth and claims, I'm quite sure there are many excellennt drivers with poor credit records, and really bad drives with an 850. I don't think your insurance fate should be determined by wealth or residence location.

I believe in the free market -- and as such also believe that regulated markets should not be rigged against certain demographics. Should drivers who have Danish ancestors pay more than other drivers just because Danes are statistically worse drivers with more claims?

There it is. My socialist side.

**Gpwrangler** · November-20-14, 11:34 AM

Originally Posted by belleislerunner

"I want to pay half of the $300 per month that I'm paying now, with no accidents. I am very aggravated."

That's $1,800/six months - now that's high - for a clean record. Who is your carrier? I just comparison shopped about 2 months ago and found Allstate to be the cheapest for District 5.

My boss tells me there are 20 factors that go into insurance premiums. Your credit score accounts for 18 of those - so that's really only of the largest drivers.

Pay bills on time, live within your means - the keys to improving it and the quality of your life.

Has nothing to do with your driving. It's insurance company bullshit. Just like not being able to collect unless the person who hits you has insurance. Why should it matter if the guy who hits me has insurance if I have insurance? Pure bullshit.

**belleislerunner** · November-20-14, 02:22 PM

There are states that do ban the use of credit scores in setting insurance rates - but it is legal in Michigan. Of course, if enough people complained/referendum - it could be outlawed too - but the prevailing thinking is people with good credit pay their bills on time, tend to have security alarms etc and thus file less claims for frivolous things - meaning home/auto insurance should be lower for such.

http://www.nbcnews.com/id/35103647/n.../#.VG4_ufnF9XF

**jt1** · November-20-14, 06:19 PM

Originally Posted by SyGolden48236

If you live in the tri-county area, but not in Detroit proper, you are penalized with the so-called "Detroit Effect". We live in Wayne County, not in Detroit, and have to pay for the sins of the inner city in our insurance rates. I just paid an annual automobile insurance bill two weeks ago for for 5 cars: for my wife, I, our two children, and a collector vehicle that is driven less than 200 miles per year, and it was just over $4,200 with no tickets and no claims for anyone in the family. My insurance agent bluntly told me the reason for the exorbitant premiums was because we live in a town adjacent to Detroit.

I could insure the same vehicles at my other address up north for about half of what it costs down here. As I do not want to commit insurance fraud, I will not do so. But it is ridiculous that we have to pay for the sins of a city that we almost never go into.

Homeowner's insurance is another issue altogether. Because we are close to Detroit our homeowner's policy is over $3,500 per annum with never a single claim. We have ample protection and security measures and still are raked over the coals for living close to Detroit.

Yeah, your insurance agent is full of it. $4200 for 5 cares is [[on average) $840 per car for coverage. Of that, about $250-$300 is for MCCA and other state mandated fees. So you are paying about $550 per car per year or about $45 per car per month.

Your $3500 homeowners claim is either bs or you have a horrible insurance agent or have a $0 deductible and a massively expensive house.

**SyGolden48236** · November-20-14, 06:43 PM

Originally Posted by jt1

Yeah, your insurance agent is full of it. $4200 for 5 cares is [[on average) $840 per car for coverage. Of that, about $250-$300 is for MCCA and other state mandated fees. So you are paying about $550 per car per year or about $45 per car per month.

Your $3500 homeowners claim is either bs or you have a horrible insurance agent or have a $0 deductible and a massively expensive house.

The automotive coverage is for 6 months, not per annum. I did mis-speak in my initial post, it was late in the evening. The annual cost is the residential policy.The deductible on the residence is $1,000. A claim has never been filed against the residential policy. I shopped multiple vendors for the policy and found that the current policy provides the proper coverage for the lowest available cost. One of my employees is also a licensed insurance agent and she reviewed my policy and found the cost to be in line with the coverage. She also mentioned the "Detroit effect".

Living in Wayne County, and adjacent to Detroit does indeed have a detrimental effect on insurance rates. I can only imagine what it would cost if I had to live in that city.

But my family is very happy in our current locale so I have to suck it up and pay the price.

**belleislerunner** · November-20-14, 06:53 PM

Your deductible on your homeowner's insurance is too low. If you lived in Dundee, your insurance would be $600/yr and you could get away with a $1,000 deductible. But when you're paying 2-3k/year in homeowners with a $1,000 deductible - you'll save quite a bit of money if you up your deductible to $5,000.

Yes it sounds scary - but actually all that means is you take 2 years without having a homeowner claim [[very reasonable) and then the rest is profit [[or not wasted money to you) due to the significantly reduced premiums. The difference between the current premiums and the reduced premiums - you need to put in a rainy day fund in case you ever need that deductible. But you'll have that in 2ish years just on the savings alone.

**jt1** · November-21-14, 10:20 AM

Originally Posted by SyGolden48236

The automotive coverage is for 6 months, not per annum. I did mis-speak in my initial post, it was late in the evening. The annual cost is the residential policy.The deductible on the residence is $1,000. A claim has never been filed against the residential policy. I shopped multiple vendors for the policy and found that the current policy provides the proper coverage for the lowest available cost. One of my employees is also a licensed insurance agent and she reviewed my policy and found the cost to be in line with the coverage. She also mentioned the "Detroit effect".

Living in Wayne County, and adjacent to Detroit does indeed have a detrimental effect on insurance rates. I can only imagine what it would cost if I had to live in that city.

But my family is very happy in our current locale so I have to suck it up and pay the price.

If you're paying $8400 per year for five cars there are details you aren't sharing. How old are your kids [[under 20?) are one or two of the cars massively expensive. $1700 per car per year makes no sense. That is Detroit rates and I assure you that people in GP are not paying GP rates.

My bs meter is just ringing out like mad on this one or there are very important details missing.