Duggan lays out cheap insurance plan for Detroiters

April 30--Mayor Mike Duggan</person> will ask lawmakers to approve cheaper insurance plans for Detroiters that would offer lower benefit levels as a way to cut down on highest-in-the-nation premiums residents pay just for living in the city, the Free Press has learned.

Duggan's plan would provide a minimum $25,000 in personal injury protection and cap catastrophic medical coverage at an additional $250,000, according to a person familiar with the proposal who wasn't authorized to discuss it publicly ahead of an announcement Duggan planned for tonight. Health care costs beyond that level would be the responsibility of a driver's health insurance provider, the person said.

Nuances such as how that would play into Michigan's current insurance laws -- including the lifetime insurance benefits provided for drivers with catastrophic injuries -- weren't immediately clear. The person familiar with the plans said only that drivers with the lower-benefit insurance would have the option to buy additional catastrophic claims coverage.

Duggan is expected to reveal the details at a community meeting tonight for residents of the city's 5th District at 7 p.m. at Historic Little Rock Missionary Baptist Church, 9000 Woodward.

The proposal would require approval by state lawmakers and Gov. Rick Snyder, and could launch battles among insurance providers.

Duggan's plan will likely face a road block in the Legislature, especially among the Detroit delegation. The Detroit caucus in the House of Representatives is united in its opposition to the plan.

"Driving with no insurance is better than D-Insurance," state Rep. Brian Banks, D-Detroit, said of the working title of the plan. "I commend the mayor for his efforts to reduce auto rates in the city. But he's offering Detroiters second class, watered down insurance policies with lowers benefits."

The Duggan plan will open up non-Detroiters, who are involved in accident with city residents, to lawsuits from people who run out of benefits and are losing wages under the D-Insurance plan, Banks predicted. And city residents would still be on the hook to pay for damages to their vehicles, because the D-Insurance plan doesn't include collision coverage.

"They'll say 'I can't afford to get my car fixed,' but they'll still have to make the car payment," he said. "Then their wages will get garnished. It's just a big domino effect."

Sen. Coleman Young, D-Detroit, said the plan is based on misplaced trust in the insurance industry to offer low rates for Detroiters.

"That's a hell of a lot of trust to put in insurance companies who haven't been particularly forthcoming," Young said. "I'm not saying that this isn't well intentioned because I think it is. But Duggan is coming at this in good faith with the insurance industry, which is operating in any way but that."

Detroit residents pay the nation's highest insurance premiums, averaging $5,000 a year, about $1,100 more than the city with the second-highest rates, Brooklyn, N.Y., according to nationwide survey by the consumer website CarInsurance.com.

DelShawn Farver lives on Detroit's west side and says he feels relatively lucky. He pays about $2,800 a year for insurance on his 2010 Kia Forte.

"It could be a lot better," said Farver, 38, a recording analyst for Title Source. "It's mostly based on your ZIP code. I've yet to have used it, to make a claim for anything, so I'm just paying into it."

Despite the added costs of living in the city, he said he doesn't plan on moving anytime soon, calling right now an exciting time to be in Detroit as it works toward rebuilding downtown and its neighborhoods.

"It hasn't gotten to the point where I've considered leaving the city," he said. "I love living here. But it would definitely be good to get a break in that department."

The high rates in Detroit are blamed for the high numbers of uninsured drivers in the city, and for pricing people out of owning a car. It's also cited by many who move out of the city as the reason for relocating.

Duggan, in his first state of the city address, proposed a city-run insurance program he called D-Insurance, but it wasn't immediately clear if that's still on the table, or whether traditional insurance companies would be permitted to provide the lower-benefit policies.

Contact Matt Helms: 313-222-1450 or [email protected]. Follow him on Twitter: @matthelms. Staff writer Kathleen Gray contributed to this report.

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