Auto Insurance Costs Soar in Detroit, Despite ReformsAuto Insurance Costs Soar in Detroit, Despite Reforms A joint investigation by The Markup and Outlier Media has revealed that Detroit has the highest auto insurance rates in the country, with an average annual cost of $5,300. This is despite reforms implemented five years ago that aimed to reduce premiums by prohibiting insurers from considering factors like zip code and race. Loopholes Allow for Geographic Discrimination The investigation found that insurance companies are exploiting loopholes in the law that allow them to group insurance risks based on “geographic area.” This means that people living in predominantly black neighborhoods, like Detroit, are paying higher premiums than those in whiter, more affluent areas. Lawmakers Involved in Reforms Detroit Mayor Mike Duggan played a key role in passing the 2019 auto insurance reform law. However, many of the current lawmakers representing Detroit were involved in those reforms, which has limited the options for residents to find a legislative solution. Financial and Emotional Burden for Detroiters The high auto insurance costs place a significant financial burden on Detroit residents, particularly those with limited incomes. Melissa Love, a single mother of six living in Detroit, shared her struggles to afford insurance. The high premiums make it difficult for her to pay rent and meet other financial obligations. Loophole Allows Insurers to Avoid Transparency According to Outlier reporter Koby Levin, insurance companies claim that higher rates in Detroit are due to a complex set of variables. However, the investigation shows that customers in predominantly black neighborhoods pay higher premiums, raising questions about the fairness of the system. Call for Accountability and Reform The report highlights the need for accountability and further reforms to address the racial disparities in auto insurance costs. Levin emphasizes that the goal should be to ensure that black communities are not paying more, and to determine how the current system has led to this inequity.
A recent joint study by The Markup and Outlier Media found that the average cost of auto insurance in Detroit is $5,300 per year, more than any other major city in the country.
Five years ago, state reforms were introduced that were supposed to bring relief by prohibiting insurers from taking into account certain factors that have nothing to do with driving when setting premiums. These include zip code, gender, marital status, home ownership, education level, occupation and credit score.
But the investigation shows how little the reforms have done to stop insurers from using where people live to set their rates. To discuss this, Outlier reporter Koby Levin and Melissa Love, a Detroiter who pays through the nose for auto insurance, joined The subway.
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Detroit Mayor Mike Duggan played a pivotal role in passing the 2019 auto insurance reform law, hoping it would save people more than $500 a year. But that’s not the case for most Detroiters and Michigan residents living in majority-black neighborhoods, in part because loopholes in the law still allow insurance companies to group insurance risks based on “geographic area.”
For that reason, Levin says, the amount you pay for insurance has everything to do with your address. And while insurance companies will say there are a lot of different variables that make those prices higher for Detroiters, Outlier’s reporting shows that customers in predominantly black neighborhoods pay higher premiums.
“What we’re hearing from the insurers is, well, if we put all these variables into our system, we end up with a rate that’s just higher for Detroit, and we’re sorry about that, but there’s nothing we can do about it.” Levin said, “And we just have to ask ourselves, if the effect is that black communities are paying more, you know, how did we get here?”
Auto insurance averages $3,200 every six months on Detroit’s west side, around Chadsey Condon, W. Grand Blvd and Buchanan, where Love is from. These rates are more than double what people living in the suburbs pay, making life in Detroit tough for the average person.
“My experience with auto insurance payments has been very hectic and stressful,” Love said. “Especially as a single mom with six kids and barely being able to pay rent, how do I afford insurance?”
Additionally, Levin says most of the lawmakers currently representing Detroit were involved in the 2019 auto insurance reforms, leaving residents with few options to find a solution outside of the law.
“If you just ban zip codes, auto insurers can still find other ways to set rates based on geography, they can just use a smaller unit or units that are even almost identical to zip codes, but it’s just called something different, you know what I mean?” Levin said. “So it’s a big loophole, and auto insurance has fallen right through it.”
Use the media player above to listen to the full interview with Levin and Love.
More heads of The subway on July 22, 2024:
- On Sunday, President Joe Biden announced he will no longer seek re-election. Biden has dropped out as the Democratic nominee and has endorsed Vice President Kamala Harris to succeed him. Stephen Henderson, host of WDET’s Created equaljoins to discuss.
- Mayor Mike Duggan’s Blight to Beauty project aims to improve the appearance of properties across the city. Katrina Crawley, assistant director of blight remediation for the City of Detroit’s Department of General Services, joined The subway to share more about the initiative.
- Belle Isle’s Giant Slide opened last Friday, and it was a big party for the residents of southeast Michigan. WDET assistant producers Sydney Waelchli and Anelle Scott were on hand to discuss the excitement of the slide’s opening.
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