LA Insurance: Provider of Mobility in Metro Detroit or Exploiter?

[Lowell]

You can’t avoid seeing them in metro Detroit. LA Insurance shops pepper the strip malls of metro Detroit like pizza and pay day loans shops. EVERYONE APPROVED! $199! Incidentally, they are a Royal Oak-based Insurance company backed by a NC underwriter, and not from LA.



But how would thousands of financially-strapped working stiffs, city and burbs, get to their stagnating-wage jobs in this near mass transportation-less metro without them? In that odd way LA provides a service, while making a tidy sum for the price of printing.

The Michigan Legislature appears near to slamming the door on that by issuing visibly different license plate or tags—you’re welcome to drive around as long as you wear this scarlet letter.

What will the consequences be?

State developing 7-day license plate for insurance crackdown

[For those not from Michigan, no-fault it is the law that requires all car owners to insure their cars for injury and liabilities. Driving your car without that insurance is illegal. To be able to get plates and tabs, one must show proof that the vehicle is insured.

LA Insurance found a gray-area niche market created by Michigan’s no-fault law by selling 7 day insurance policies, allowing the financially strapped enough time to show proof of insurance allowing them to get plates for their cars. A large percentage of the insured drop their coverage for the remainder of the year, then buy another 7 day ‘pass’ when the tags expire.]

[Meddle]

Why do a special plate? Prohibit policies less than 6 months.

[Meddle]

Along with solid consumer centric insurance reform so people can afford legitimate policies.

[Johnnny5]

Why do a special plate? Prohibit policies less than 6 months.

The problem with that approach is that there are many legitimate reasons for short term insurance policies. Seasonal use vehicles, rentals, etc.

[Sandhouse]

Thanks for posting the link the Crain's article. Now I know what's up with the "L.A. Insurance" shops.

One way or another, it will get harder to drive without insurance in Michigan. If Ruth Johnson does not get her "scarlet letter" plates [[legislation would be needed for the new plates), then other legislators will eventually create a real-time data base of insured cars, accessed by automated plate readers. [[These are the devices the size of cigarette packs on the fenders of police cars.) The devices will beep when the cop car passes an uninsured car, signaling the officer to pull it over. The data-base scheme is a favorite of Rep. Lucido of Macomb County, and is in HBs 4622 and 4623, plus HBs 4010 and 4041. Lucido's bills would also make uninsured driving a misdemeanor and increase fines by $450, or $1,400 for the second offense Most of the administrative structure already exists.

These people learned nothing from the $400 or $1,000 fines for uninsured driving under the "Driver Responsibility Act." Those fines are gradually being phased out, but they have left hundreds of thousands of people in debt to the state, probably forever.

An opposite approach is Sen. Young's SB 472, which would legalize short-term insurance policies.

Legislators can make it harder for uninsured drivers, but they've been unable to fix insurance costs. If they don't do both, the problem will persist. People will simply drive without plates, too. It remains to be seen if the various interests will continue to fight to a draw over no-fault. The insurers and the medical establishment are fighting for a piece of us.

Thanks to the reporting of the Free Press, it sounds like the real evildoers are the scam artists who induce crash victims to apply for unneeded, high-priced medical services. But there are still no good guys in this war.

Insurance is not mandatory in Wisconsin. And yet, somehow life goes on in Waukesha and West Allis.

[Zacha341]

That LA Insurance 7-day scam is not cheap I hear. Just an insane situation.

[313WX]

That LA Insurance 7-day scam is not cheap I hear. Just an insane situation.

Nope.

That said, I'm grateful for L.A. Insurance. They got me a quote of only $153/month on a 2007 vehicle in 48205. Can't beat that with a stick. Had I been forced to go directly to the big insurance agencies, I'd probably be paying double that amount.

[Zacha341]

I hear that. I left the AAA's, Farmers, State Farm, Allstate etc. loop of big name--big ticket insurances decades ago now. Unaffordable.

I use smaller insurance companies that base rates on small specialized employment pools. But even then it's high, so I've never purchased a new car. Can't do a car note and insurance rate required for that.

LA mainly socks the high price to the folks who've allowed their car insurance to lapse. Painful penalty, that.

[professorscott]

Provider of mobility and exploiter. This is the sort of business that can make money when people are given no reasonable option for going about their day-to-day business than to drive a car.

[dtowncitylover]

Has anyone seen those commercials for Crazy 88? $88 down, $88 a month? Car guy...all these real people trying to "act" and I'm thinking, "Why would anyone finance someone who just had their car repo-ed?"

[Shai_Hulud]

Has anyone seen those commercials for Crazy 88? $88 down, $88 a month? Car guy...all these real people trying to "act" and I'm thinking, "Why would anyone finance someone who just had their car repo-ed?"

Because it makes money.

https://www.youtube.com/watch?v=4U2eDJnwz_s

Long story short, sell a $3,000 car for $8,000 at 20% interest to someone desperate. When they default, sell the loan to collections and repo the car.

Add up the down payment, financing fee, whatever payments collected and the sale price of the loan and you have a decent chunk of change. And, of course, you still have the car so you can rinse and repeat.

[dtowncitylover]

Because it makes money.

https://www.youtube.com/watch?v=4U2eDJnwz_s

Long story short, sell a $3,000 car for $8,000 at 20% interest to someone desperate. When they default, sell the loan to collections and repo the car.

Add up the down payment, financing fee, whatever payments collected and the sale price of the loan and you have a decent chunk of change. And, of course, you still have the car so you can rinse and repeat.

Haha thanks! I really don't know, not in that business but damn that's so sketchy. Can that be cracked down or would that be viewed as anti-capitalist?

[Bigdd]

Long story short, sell a $3,000 car for $8,000 at 20% interest to someone desperate. When they default, sell the loan to collections and repo the car.


......rinse and repeat.

I knew 2 guys that had those type of businesses. One was on the corner of 9 mile and Little Mack I think.

It would be RARE that the down payment didn't equal the total investment the dealer had in the car at the time [[Price paid at auction, transport, cleaning, etc)

Generally if they're selling a car for $5,000,... it was bought for perhaps $1,200 at auction. They get the $1,200 as a down-payment from the poor buyer, then finance the rest at a high interest rate [[somewhat understandable as the buyer has terrible credit). Any payments they receive are gravy.

More often than not,.. they'll end up re-po'ing the car [[they'll have a GPS hidden in the car somewhere),.. and they'll sell it again. Not uncommon for them to sell the same car 2-3 times, with the 3 down-payments,.. 10-15 monthly payments made by the first two buyers and the third buyer paying the car off in 3 years,.. they'll have collected in total somewhere between 4 and 9 times what they originally paid for the car.

[Shai_Hulud]

Haha thanks! I really don't know, not in that business but damn that's so sketchy. Can that be cracked down or would that be viewed as anti-capitalist?

There is talk of restrictions on used car dealers and pay day loan companies but it's not likely in our current political climate.

Generally, I am for letting people bump their head and learning the hard way but those two things make me ill.