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Bill would cut auto insurance rates for Michigan's working poor

A Senate bill would give the state’s working poor access to less expensive auto insurance.

Detroit residents pay an average of $4,500  a year for auto insurance – the highest in the nation.

The bill, introduced by State Sen. Virgil Smith, D-Detroit, would cut insurance premiums for some people to about $1,000 a year.

The rate would apply to people who earn $32,000 or less, have good driving records, and who own a vehicle valued at less than $20,000.

Butch Hollowell is with the Coalition Protecting Auto No-Fault.

He says the bill is a good start, but he worries it would limit accidental health care coverage to $50,000 – not enough, he says, for catastrophic injuries.

"We have a concern that you give up one of the central pillars of no-fault, which is coverage for all of your reasonable and necessary medical expenses, and in exchange what do you get? We're not sure," Hollowell says.

Hollowell says about one-third of all drivers in Michigan don’t have insurance because it’s too expensive, but they drive anyway.

"This reflects the reality of unaffordable rates, at a time when accidents are going down dramatically, and insurance companies' profits are rising," Hollowell says.

He also says urban areas like Detroit are unfairly targeted by insurance companies, which claim higher rates are based on things like car theft.

Hollowell says auto theft represents only two percent of an insurance premium. He believes the larger issue is one of discriminating against people with poor credit ratings.

"Your credit score has nothing to do with how you drive," Hollowell says. "But insurance companies have been allowed to do that since a Supreme Court ruling a few years ago.

"So, for example, if you have a drunken driving conviction, but you have a good credit score, you actually get a lower rate than somebody who lost their job at General Motors, has not been able to find work since then, but has never been in an accident."

Hollowell also points out that insurance companies may take a person's education into account when calculating the price of a policy.

"You get a better rate if you're an architect versus a mechanic," he says. "It's just not fair."