Smart Auto Insurance Blog

State House Democrats announced last week a plan that would cut Michigan auto insurance rates and apply stricter restrictions on auto insurance companies according to the article “House Democrats Unveil Plan to Cut Auto Insurance Rates” by Chris Christoff on freep.com. 

Insurance companies state that this type of regulation will result in higher premiums for drivers.  The government’s plan would require insurers to offer low-cost auto insurance to drivers with lower income and good driving records.  Democrats and the state Insurance Consumer Advocate, Butch Hollowell, say the insurance industry is practicing unfair pricing. 

The article points out that Michigan has the second highest rates in the US just behind New Jersey.  This is despite the fact that accidents and thefts in Michigan have gone down over recent years.  The bill would also prohibit companies from using some discrimatory factors such as a driver’s education, their careers, or their personal credit ratings when determining auto insurance quotes.

A proposed bill to ban higher auto and property insurance rates for those living in Detroit, Michigan and surrounding areas failed in the Senate recently according to the article “Bill to Ban Higher Insurance Rates In Detroit Fails” by Karen Bouffard on detnews.com. 

The Senate brought the bill for a vote by Sen. Martha G. Scott, D-Highland Park, who urged Congress to pass the bill.  She said the state of Michigan pays the 12th highest auto insurance rates, but in the urban area it’s the highest in the country.  Sen. Alan Sanborn, R-Richmond believes the ban would increase rates for people who live in non-urban areas. 

The new bill could result in higher auto insurance rates for 3 out of 4 Michigan drivers according to Sanborn.  He believes there needs to be another way to solve the high cost of Michigan auto insurance.  As many people are struggling in this economy, auto insurance costs are becoming challenging for many residents.  Hopefully something can be worked out to help make auto insurance more affordable for all.

According to the article “Credit Scores Studied As Factor” by the Freepress Staff on Freep.com, the Michigan Supreme Court listened to arguments on October 7th about auto insurance companies using a customer’s credit score when considering their home and auto insurance rates.

Using the credit score was outlawed by the state back in 2005, but the insurance companies will be allowed to use the score as a risk factor pending the outcome of their lawsuit currently in the Supreme Court.  Most insurance companies offering Michigan auto insurance are to offer some sort of discount on premiums with use of a credit score.

Lawyers representing the insurance industry told justices that Linda Watters, the former Insurance Commissioner, overstepped her boundaries when she banned discounts based on good credit ratings.  Attorney Peter Ellsworth believes that insurance scores do not work and states that 60% of policyholders will pay higher costs if the court allows the ban of the credit score.

The high Michigan auto insurance quotes in Detroit and other Michigan cities are driving residents out as more and more people cannot afford the high costs.  It’s also causing thousands of residents to commit fraud or drop their insurance altogether.  This is according to the article “Car insurance rate setting hits Detroiters unfairly” by Jeff Gerritt on freep.com. 

Detroit is the nation’s poorest big city yet residents pay the highest average auto insurance rates in the country.  About half of its motorists go without insurance because it’s so expensive.  Part of the reason for this problem is what’s called territorial ratings, which allow auto insurance companies to base their prices in part where people reside.  Regardless of a person’s driving record, if they live in Detroit they will pay more for auto insurance.  Insurers state the reason for doing so is because these areas have been deemed higher risk. 

Since many are unable to afford their auto insurance costs, schemes are on the rise.  Some drivers buy fake insurance certificates for as little as $50.  Some use false suburban addresses when purchasing their policy to obtain a lower quote.

According to the Associated Press, Michigan auto insurance policy holders will soon have to pay more in fees as of July 1st. The Michigan Catastrophic Claims Association raised its fee, which covers seriously injured victims of car accidents, to $125 per vehicle. The charge is a $20 increase from last year.

Since Michigan is the only state that offers unlimited lifetime medical benefits through auto insurance for the seriously injured, the MCCA levies the fee to cover rising medical costs. The fee was actually reduced by $18 last year; however, that was due to investment gains that reversed themselves this year.

In the Detroit Free Press, Kathleen Gray reports that 12 Michigan auto insurance companies have agreed to freeze their rates for a year. However, 96 other insurers have not agreed to the rate freeze as of the March 1st deadline. Governor Jennifer Granholm requested that insurers freeze their auto insurance premiums for a year while the state legislature works on auto insurance reform. 

The insurance companies that have agreed to freeze their auto insurance rates are:

• American Bankers’ Insurance Company of Florida
• American International South Insurance Company
• American Reliable Insurance
• Wolverine Mutual Insurance Company
• Pharmacists Mutual Insurance Company
• Great Lakes Casualty Insurance Company
• Electric Insurance Company
• Essentia Insurance Company
• Meritplan Insurance Company
• IDS Property Casualty Insurance Company
• Liberty Mutual Property Insurance Company
• Merchants Mutual Insurance Company

Following up on Michigan Governor Jennifer Granholm’s request that auto insurers in her state freeze their rates for 12 months, the Insurance Journal reports that 5 companies have complied. So far, the Michigan auto insurance providers that have frozen their rates are:

• Electric Insurance
• American International South Insurance
• Merchants Mutual Insurance
• Wolverine Mutual Insurance
• IDS Property Casualty Insurance

More insurers may soon follow, allowing Michigan drivers to pay a lower auto insurance rate.

According to the Insurance Journal, Mich. Governor Jennifer Granholm is asking for a year-long freeze in auto insurance rates. Michigan auto insurance is some of the most expensive in the country, and state legislators want the time to figure out reforms.

The Office of Financial and Insurance Regulation will have the ability to penalize any auto insurance companies that refuse to refrain from increasing premiums during the next 12 months, the Democrat says.

Michigan residents have been hard hit by this recession, especially those in the Detroit auto industry. This request will offer them a measure of relief.

The Detroit Free Press reports that mayoral candidate Freman Hendrix claims that he will file a class action lawsuit against auto insurance companies if they do not lower Detroit auto insurance rates.

Detroit auto insurance rates are the highest in the country, twice as high as the rates for Philadelphia, the second highest cost city.

According to the Michigan office of Financial and Insurance Regulation, auto insurance rates vary greatly even within Metro Detroit.

Some Michigan Auto Insurance examples from top carriers

Married couple with 2 children and a clean driving record would pay GEICO $4738 if they lived in Southwest Detroit, $3244 in Pontiac or $2482 in Warren, and $1906 in Kalamazoo for comparable auto insurance coverage before any  discounts.  Through Allstate the family would pay $13,014 in southwest Detroit, $7774 in Pontiac, $6464 in Warren and $5536 in Kalamazoo.

More information about Michigan Auto Insurance.