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Is recent auto insurance reform good news for low-income Michiganders? Maybe.

Car accident
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Reforms to the state's auto insurance law, recently passed by the state Legislature, would allow drivers to choose from tiers of personal injury protection.


Arecent studyby the University of Michigan found auto insurance rates are unaffordable for residents in 97% of Michigan counties.


The high rates are especially tough on low-income residents in Detroit, where auto insurance rates average $5,414 a year. So, would recent changes to the state's auto insurance law, passed by state lawmakers last week, help those drivers most in need of relief? 


Patrick Cooney is the assistant director of the University of Michigan Poverty Solutions' Detroit Partnership on Economic Mobility. Stateside talks to him about how the recent auto insurance reforms might impact low-income households, and the tough choices low-income Michiganders have to make when they can't afford auto insurance. 


Michigan residents pay an average of $2,610 a year for auto insurance. That's nearly twice the national rate. Detroiters pay more than double that, an average of $5,414 a year. Cooney says he thinks that the recent legislation passed by the state Legislature, which Governor Gretchen Whitmer has pledged to sign, is a step in the right direction. 


The legislation implements a tiered system for auto insurance. Previously, all Michigan drivers were required to pay for unlimited lifetime personal injury protection. Now, drivers will be able to choose from different levels of protection, based on the price tag and their own preference. 


Another major change under the legislation is that insurance providers can no longer use some non-driving factors to set rates. These factors include marital status, zip codes, credit scores, and gender. However, providers can still use geographic location to set rates. Some Democratic state legislators think this could provide adiscrimination loophole for insurance companies.

Critics of the latest reforms say that allowing drivers to choose lower levels of personal injury protection will just lead to increased costs in health care and car repairs down the road. But Cooney says the benefits, especially to low-income drivers, outweigh the risks. Without reliable transportation, he says, economic mobility is almost impossible.

CORRECTION: A previous version of this post inaccurately stated that Governor Gretchen Whitmer had signed the legislation passed by the state Legislature last week. That is incorrect. She has said that she does plan to sign the legislation. The story has been corrected above.  

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