City Cracking Down on Those Who Use Suburban Addresses But Live in the City

[mwilbert]

How many urban professionals are willing to forego owning a home in exchange for cheaper car insurance? I just don't see it.

I don't think this works the way you think it does.

Let's pretend like this.

My parents live in Birmingham. I use that as my address, for everything, all my life. Car registration, driver's licenses, credit cards, everything is associated with that address.

Then, at some point, I realize Birmingham is awful and feel the need to move to the Broderick to restore my soul. I do that, applying for the apartment using my information in Birmingham, as I should. But, theoretically, the Broderick is just my pied-a-terre, and I still keep everything registered in Birmingham. However, I only actually go to Birmingham on alternate Tuesdays, so this is not correct, and I am not paying proper insurance, taxes, etc.

But how does this stop me from subsequently buying a house? My credit is what it is. When I apply for a mortgage, why do I not get it? If the mortgage issuer even knows about the apartment, it is just a second home?

[EGrant]

mwilbert, that is exactly what is happening. It's not a big deal to use your parent's address because you can still get all your bills and such in the mail. Plus, most college students keep their residence at home [[almost no one updates their driver's license to their college apartment address), despite living on or off campus away from home. The new pad at the Broderick is just an extension of that thinking, in their minds.

[Wesley Mouch]

Wesley.... look at it this way... when you call 911 in the Grosse Pointes because someone is breaking into or stealing your car... you can expect a less than 5 minute police response time... thus greatly increasing the chances that an insurance payout will be minimal.

In Detroit... I don't know what the response time is... although much improved... so I tend to think that your 911 call is being prioritize behind more serious crimes... and the likelihood is that with a longer wait... the auto insurance payout is going to be much much more than it would be in the Grosse Pointes.

Yes, I agree with you. I was mostly pointing out that address isn't a good proxy for risk. There is a strong correlation -- with there are excellent risks in Detroit, and poor risks in the Pointes.

There must be a better way. I agree with crackdown, but should be married with innovation. How's Duggan doing on this. He's right to focus here.

[Bham1982]

But how does this stop me from subsequently buying a house? My credit is what it is. When I apply for a mortgage, why do I not get it? If the mortgage issuer even knows about the apartment, it is just a second home?

I still don't think this is very likely, unless we're talking college kids [[in which case it isn't fraudulent; college kids don't need to list their college address as permanent address).

In order to obtain a mortgage, you often need letters from landlords at past addresses and proof of previous rent payments. In your scenario you would have to ask parents to formally lie about your residence, and you would have to somehow explain why large rent payments were going to a Detroit address while no such payments were going to your parents.

Is downtown's primary population 20 year olds from Oakland County going to Wayne State? I thought it was a much older, wealthier crowd; one where a few extra dollars a month in insurance payments wouldn't be much of a burden.

[mwilbert]

In order to obtain a mortgage, you often need letters from landlords at past addresses and proof of previous rent payments. In your scenario you would have to ask parents to formally lie about your residence, and you would have to somehow explain why large rent payments were going to a Detroit address while no such payments were going to your parents.

I bet there are mortgages where the documentation doesn't require information about rent payments. I haven't had a mortgage in a really long time, but when I did they didn't ask anything of the kind. But I assume what you would tell them is that you were living with your parents, but paid for an apartment for convenience, for improved commuting or for safer drunken evenings or perhaps for your assignations with persons unapproved by your parents. As long as the mortgage company confirmed the payments, why would they care? Many people seem to stay with their parents until quite advanced ages these days, so this doesn't even seem unreasonable.

Is downtown's primary population 20 year olds from Oakland County going to Wayne State? I thought it was a much older, wealthier crowd; one where a few extra dollars a month in insurance payments wouldn't be much of a burden.

I don't know who does what, but the difference between suburban and Detroit insurance rates seems to be more than a few dollars/month. I do think that being improperly insured is more of risk to people with more money, while income tax evasion is more attractive to people with more money, so perhaps in the higher income brackets they are paying their insurance but not their taxes.

[EastsideAl]

I don't know who does what, but the difference between suburban and Detroit insurance rates seems to be more than a few dollars/month.

This is the important point. When I lived in East Lansing my auto insurance was about $1,000/year, when I lived in NYC my auto insurance was $1,100/year, in Detroit my insurance is well over $3,000/year. Same car, same good driving record, same lack of claims made.

So I can see why one would be tempted not to pay that crazy extra amount, particularly if one had an easy alternative that didn't take much effort. Probably without giving a lot of thought to any potential long-range consequences. I sure would have done it when I was younger. Hell, even now as a mature, responsible citizen, who hasn't had an accident or a ticket [[or made a claim) since 1989, and doesn't plan on having any, I'd be lying if I said the thought doesn't cross my mind every time I receive my completely outrageous auto insurance bill. If only just to screw the insurance company out of the insane profit-margin they are getting through gouging people like me.

[masterblaster]

I still don't think this is very likely, unless we're talking college kids [[in which case it isn't fraudulent; college kids don't need to list their college address as permanent address).

In order to obtain a mortgage, you often need letters from landlords at past addresses and proof of previous rent payments. In your scenario you would have to ask parents to formally lie about your residence, and you would have to somehow explain why large rent payments were going to a Detroit address while no such payments were going to your parents.

Is downtown's primary population 20 year olds from Oakland County going to Wayne State? I thought it was a much older, wealthier crowd; one where a few extra dollars a month in insurance payments wouldn't be much of a burden.

Why do you keep minimizing the mark-up we pay in Detroit? The difference in monthly auto insurance costs between Detroit and the suburbs is 200 to 400 dollars a month. That is not insignificant.

[Zacha341]

^^^ Yes, Michigan insurance as a state is sky high. Detroit even more! The cost difference renders a very high percent here in the D. Made higher by people committing fraud, car theft etc as already referenced. Insurance cost has impacted rather I can carry a finance note AND pay high insurance.

I'm employed and cannot afford to do both!

So, I drive older cars I own flat out, so I only need to deal with paying my high insurance premiums.

[Wesley Mouch]

...snip..If only just to screw the insurance company out of the insane profit-margin they are getting through gouging people like me.

Do you think all the insurance companies, in a smoke-filled room, decided that screwing Detroiters was the road to profit?

Or maybe the actual cost of claims in Detroit are just higher than NYC or East Lansing?

Me? I vote for smoke-filled rooms of bastards.

[detroitsgwenivere]

I'm like you Zacha, I've never had a car note, I had to take the bus for over a decade through college and work, busted my ass for years saving up thousands to outright buy a decent car simply because I cannot afford the full coverage insurance. When I got the car in '09, I was quoted over $2000 for 6 mos of comp only. No points, no accidents, a clean license for years before I started driving full time. But I knew this would be the way it is coming into this, making a trade off between the way I want to live and the convenience of affordable living. It sucks, but the current system has been effed for so long that I imagine it must improve as opposed to getting worse. I'm not holding my breath though, and I'm not leaving Detroit because of it.

I know plenty of people who live in some of the worst Detroit neighborhoods you could ever imagine living in, paying as much in property taxes as someone in Corktown or Midtown does, paying their city income tax while driving to work in the burbs, paying 500+ a month for full coverage insurance on a car from some shitty corner lot with a note that's less than a hundred bucks a month, mostly interest, no gap coverage. We know they aren't reaping the rewards of downtown living by any stretch.

I'm wondering if many of the people the city is talking about going after have just neglected to go downtown to the city county to file their taxes in a few years, but the money was withheld none the less. If that's the case, count me on that list too.


Lenders ask for every bit of financial information that you can provide to obtain a mortgage, your rent payments, utilities, insurance, taxes [[known as pre-piti), at least 6 mos of bank statements, paperwork for any large cash deposits, etc. There's even more scrutiny if you're looking to take on a government backed loan, they also want to know the financial information of the people living in your home in some cases. The more assets you have, ie: the wealthier you are, the less questions they ask, unless you are purchasing an expensive residential property with a high loan amount, or a commercial one with larger escrow requirements.

[Zacha341]

Yes I think many are feeling what you have said... and as we are not buying new cars that impacts the automotive industry but so be it...

I'm like you Zacha, I've never had a car note, I had to take the bus for over a decade through college and work, busted my ass for years saving up thousands to outright buy a decent car simply because I cannot afford the full coverage insurance. When I got the car in 2009, I was quoted over $2000 for 6 months of comp only. No points, no accidents, a clean license for years before I started driving full time. But I knew this would be the way it is coming into this, making a trade off between the way I want to live and the convenience of affordable living. It sucks, but the current system has been so effed for so long that I imagine it must improve as opposed to getting worse. I'm not holding my breath though, and I'm not leaving Detroit because of it.

I know plenty of people who live in the worst Detroit neighborhoods you could ever imagine living in, paying as much in property taxes as someone in Corktown or Midtown does, paying their city income tax while driving to work in the burbs, paying 500 plus dollars a month for full coverage insurance on a car from some shitty corner lot with a note that's less than a hundred bucks a month, mostly interest, no gap coverage. We know they aren't reaping the rewards of downtown living by any stretch.

[Dumpling]

This is going a little ways away from the original topic, but, I have
been trying to find out if metro Detroit auto insurance rates have
been going down recently on account of the improved employment
picture over the last three years as well as more people being covered
by medical insurance through The Affordable Care Act and expanded
Medicaid.
Earlier it was shown that the catastrophic coverage in Michigan was
actually a smaller fraction of the auto insurance cost, but other medical
coverage was a large fraction of the cost, because there were so many
without health insurance. So all else being equal the overall rates should
have come down over the last three years.

[313WX]

Good! About time!

[313WX]

With respect to car insurance...

I'm in 48205, but I actually lucked up nicely and got a decent rate for no-fault insurance [[~$150/month). I'm fairly young and the car isn't some 20 year old hooptie either.

Needless to say, I can't complain at all.

[EastsideAl]

Do you think all the insurance companies, in a smoke-filled room, decided that screwing Detroiters was the road to profit?

I think they figured out they could get away with it because 1) Michigan's system [[especially post-Engler "reform") encourages such huge disparities, and 2) no one was going to rush to the defense of Detroiters for the same reasons that no one in Lansing [[or elsewhere in the state) ever rushes to the defense of Detroiters. We're mostly a lil' *ahem* 'different' down here.

Or maybe the actual cost of claims in Detroit are just higher than NYC or East Lansing?

Doubtful. Except that what is somewhat higher is the cost of medical claims, again because Michigan's cockamamie system encourages maximum profiteering by hospitals, clinics, and lawyers. Certainly their actual cost of claims on this Detroit resident has been approximately $0, yet I'm being charged like I'm costing them thousands because this state allows them to do so.

Me? I vote for smoke-filled rooms of bastards.

I don't know about the smoke, but some place involved is definitely full of bastards.

[Dumpling]

I TOTALLY approve of the person who had a bump strip installed on his residential street - the city had it removed, saying that they did not
want to be responsible for all of the damages and suits arising from
accidents arising from the bump strip. Notice that there were recent
incidents of concrete chunks coming up from the local expressways and
going through windshields, but for those incidents MDOT is currently
legally protected from damage lawsuits, and additionally, lawsuits for injuries from uneven sidewalks within Detroit are now not being reimbursed either. All we need now is similar legal immunity for bump strip damage claims. There ARE a few drivers in Detroit that drive at wildly excessive speeds in residential areas.
[[Actually I do think people should receive compensation for all of these
claims - but the City of Detroit was paying out something like more
than $50 million every year at one point for various claims & MDOT
would probably be paying a similar amount if they had to do that.
Maybe this should be a line item on the already complicated State
Income Tax form - it might read, would you like to ADD infrastructure
claim insurance coverage for an annual extra cost of $20 to $100 on
your state and local taxes.)

[Hermod]

Notice that there were recent
incidents of concrete chunks coming up from the local expressways and
going through windshields,

I thought the problem was concrete chunks coming down from Detroit's expressway overpasses [[with the assistance of the more upstanding citizens).

[Dumpling]

The incident caught on dashcam showed a road chunk on the left shoulder
being kicked up by the SUV in front.
It can happen that chunks are dropped by citizens as well but that
doesn't seem to be the case this time - the spring thaw cycle debris
is more at fault this time.

[Bham1982]

Why do you keep minimizing the mark-up we pay in Detroit? The difference in monthly auto insurance costs between Detroit and the suburbs is 200 to 400 dollars a month. That is not insignificant.

I don't believe this is true. You're telling me the average annual difference in auto insurance is roughly $3,600 a year?

So, assuming the typical suburban household is paying, say, $2,500 a year for two cars, you're saying the typical Detroit household is paying $6,100? I'd like to see some independent corroboration.

[Jimaz]

The incident caught on dashcam showed a road chunk on the left shoulder
being kicked up by the SUV in front.
It can happen that chunks are dropped by citizens as well but that
doesn't seem to be the case this time - the spring thaw cycle debris
is more at fault this time.

You might be referring to the video here: Video shows flying concrete smash into car windshield on I-696.

There have been multiple incidents like this lately but I haven't seen any reputable reports of any occurring "with the assistance of the more upstanding citizens."

We're devolving into a Mad Max world.

[detroitpride313]

I don't believe this is true. You're telling me the average annual difference in auto insurance is roughly $3,600 a year?

So, assuming the typical suburban household is paying, say, $2,500 a year for two cars, you're saying the typical Detroit household is paying $6,100? I'd like to see some independent corroboration.

This an an old article and it's based on interviews conducted by the Free Press but it says the average price per vehicle of someone in Detroit is from $2,400 - $5,400 annually http://www.freep.com/story/money/bus...iums/19411987/ . But I 100% agree with masterblaster about how large the difference is because I've seen that in my own search...if I just move to the suburbs my insurance would be cut in half which is a huge difference given my rate was higher than my car payment before I switched to the company I'm at now [[now my rate is equal to my car payment which is still outrageous but better)

[EastsideAl]

I don't believe this is true. You're telling me the average annual difference in auto insurance is roughly $3,600 a year?

So, assuming the typical suburban household is paying, say, $2,500 a year for two cars, you're saying the typical Detroit household is paying $6,100? I'd like to see some independent corroboration.

What the hell do you think everyone is going on about here?

[Zacha341]

Exactly! A luxury four-door sedan carrying full coverage/ collision can be nearly double in Detroit. It's incredible. I know a family paying 9K for two cars, one specialty truck a year.

What the hell do you think everyone is going on about here?

[Richard]

You can change it but the amount of lawsuit in the event of an accident is capped.

That is why they are saying the rates are so high. No caps currently.

Kinda like the city bus accident where 6 riders on the bus but 12 laying on the ground in pain when ems arrived. Lawyers must love Detroit.

[Wesley Mouch]

I don't believe this is true. You're telling me the average annual difference in auto insurance is roughly $3,600 a year?

So, assuming the typical suburban household is paying, say, $2,500 a year for two cars, you're saying the typical Detroit household is paying $6,100? I'd like to see some independent corroboration.

The FP article is a real source, but I'm sure there must be apples-to-apples comparisons done by someone somewhere [[in between doing gender and rae studies).

The exactly premium may be in dispute, but there's no disputing that Detroiters pay much, much more.

So the next discussion here should be what to do about it?

If catastrophic isn't the problem [[I have to read more there), and its not evil profit-seeking bastards stealing poor Detroiter's cash, then it seems there are only three classes of solution.

1) Catch the evaders, perhaps with GPS or other methods -- so as to make sure the high insurance payouts are collected fairly from all residents,

2) Spread the pain, but eliminating city/zip as boundaries, and spreading this cost to the region, or even state. The out-state and suburban folks feeling this pain might aid in #3, which is...

3) Fix the underlying problem... which is probably that too much money is being paid out proportionate to actual injuries. Is it the insurance companies enjoying paying out? Or legal system driving settlements when it should fight cases? Or what? I don't know. But I know its not right. Maybe better driving training? Or allowing police to 'shoot horse thieves'? G-d knows, but if too much money is being paid out, that is the real problem.