New Alliance Demands Cheaper Detroit Car Insurance With Same Benefits

March 27--A newly formed alliance of Detroit church groups and community leaders is urging state lawmakers to pass legislation to lower car insurance rates in the city.

The Detroit Alliance for Fair Auto Insurance had its first news conference Monday at Salem Memorial Lutheran Church on the east side and plans to hold a series of town hall-style discussions about no-fault insurance rates and policies and ways for lowering insurance costs.

The alliance's leaders placed the blame on car insurers for Detroit's high insurance rates, especially the insurance industry's practice of using a version of motorists' credit scores to set rates and basing rates on customers' residential ZIP Codes, which the group called "redlining."

"There is a need for fair auto reform that eliminates non-driving related rate-setting factors," said Darrell Reed, pastor at Spirit of Love Church.

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Insurance companies say that ZIP Codes allow them to contain the costs of no-fault benefits, thefts and crashes to the specific geographic areas where those who generated the costs live. Insurers also contend that a person's history of paying bills on time is relevant to safe driving and their likelihood of filing claims.

Former state Rep. Brian Banks said the group does not support reform proposals, such as Mayor Mike Duggan's D-Insurance plan, that call for giving Detroiters the option to buy a car insurance plan without potentially unlimited medical benefits. Michigan is the only state that mandates the purchase of uncapped medical benefits with car insurance.

"We want guaranteed rate reduction so we can get the same benefits, the same protections as those people who live in our surrounding suburbs," Banks said.

An actuarial study commissioned by the city of Detroit and released in 2015 found that Detroiters are using the medical benefits portion of their no-fault insurance, known as personal injury protection, at twice the frequency as those from nearby suburbs and are making much bigger claims for payouts.

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