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One reason Detroit auto insurance prices are higher that no one talks about

June 11, 2015 by Steven M. Gursten

Detroit injury crashes

I’ve written about the problems of high auto insurance prices for Detroiters for a very long time, including here, here and here. The problem is not easy to fix.

The latest, Mayor Mike Duggan’s auto insurance plan, is absolutely terrible for Detroiters. While I cannot be more emphatic in saying Mayor Duggan’s plan fails in every important regard, the need to reduce the cost of auto insurance is desperately needed. An estimated 50% of Detroiters are “driving dirty”— that is, driving without any auto insurance at all, according to a published report by the Detroit Legal News.

Maybe it’s just because of what I do for a living, but one factor continues to be overlooked in all the reasons why  Detroit auto insurance prices are higher than in other Michigan cities. No one is talking about this factor, even though as an automobile accident attorney, I see it every day.

And if I see it, then the insurance companies must be seeing it.

So must Mayor Duggan.

My hunch is one of the reasons Detroiters pay more for auto insurance is because there are thousands more injury-producing motor vehicle accidents in Detroit than anywhere else in this state.

Detroit has  more “injury” automobile accidents than other Michigan cities

In 2014, Detroit had 260% more “injury” auto accidents (4,767) than Grand Rapids (1,323) and 385% more ‘injury” auto accidents than Sterling Heights (981). This is according to the 2014 Michigan Traffic Crash Facts “County Profiles” for Wayne, Kent and Macomb counties.

Having more “injury” auto accidents is significant. It means more No Fault medical-benefits and automobile injury claims with insurance companies. And that means more claims paid out by auto insurers.

It also means, unfortunately, more fraud, more ambulance-chasing by a certain small but growing number of lawyers and law firms that I’ve written about, and more ugly solicitation of people who were just involved in automobile accidents. This is, by the way, the same point Mayor Duggan made when he was testifying before the Senate Insurance Committee two weeks ago and discussed the problem Detroit has with “billboard lawyers” and medical-legal referral services that are also driving up the cost of No Fault auto insurance in Detroit.

The extent to which Detroit has more injury-producing car crashes than other Michigan cities is made clear by the following chart:

2014 statistics for “injury” crashes and resulting “injuries” comparing Detroit to other Michigan cities

Injury crashes Detroit

(Source: as reported in the 2014 Michigan Traffic Crash Facts “County Profiles” for Wayne, Kent, Macomb, Ingham, Washtenaw and Genessee counties)

In his written testimony, Detroit Mayor Mike Duggan answered the question of “Why are Detroiters [auto insurance] Rates Higher?” by stating:

“Detroiters have the same number of accidents as other communities. But we have twice as many medical claims on those accidents. And each medical claim is twice as expensive.” (Pages 9 and 11 of Mayor Duggan’s written testimony to the Senate Insurance Committee on May 26, 2015)

Unfortunately, that doesn’t fit the facts.

For instance, Detroit has a population of 688,701. Grand Rapids has a population of 192,294.

With 6,776 “injuries” resulting from 4,767 “injury” crashes in 2014, that means Detroit had one injury for approximately every 101 citizens. By contrast, Grand Rapids, with 1,694 “injuries” resulting from 1,323 “injury” crashes, had one injury for approximately every 113 citizens.

This is not the greatest driver of why auto insurance is higher in Detroit, obviously. Issues like credit scoring (which I have compared to legal discrimination against the poor and minorities in cities like Detroit) play a much bigger role. But it is a factor, nevertheless. Insurance companies insure against the risk of future claims.

Thus, even adjusting for population, Detroit still had more crash related “injuries” than Grand Rapids, which plays a role in premium calculations.

The data and statistics from the Michigan Traffic Crash Facts show that Detroit has thousands more “injury” car crashes than other Michigan cities.

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