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Discriminatory No-Fault practices punish safe drivers, drive up insurance rates

August 26, 2017 by Steven M. Gursten

Attorney Steven Gursten tells The Peninsula that No-Fault practices like credit scoring amount to legalized discrimination and D-Insurance punishes most vulnerable Detroiters who need No-Fault benefits most

No-Fault practices

As an auto accident and insurance attorney, I see firsthand how car insurance companies’ discriminatory and unfair No-Fault practices punish drivers and drive up the cost of insurance. Car insurance companies use credit scoring and “redlining” (using residential ZIP codes to set premiums) to treat drivers with otherwise identical driving records very differently. These No-Fault practices are illegal in many other states. They should be in Michigan as well.

In a recent article in The Peninsula, a Michigan business news publication, I explained why these non-driving factors contribute to some of the biggest problems with the Michigan No-Fault insurance system.

Bad No-Fault practices punish people for where they live

The Aug. 4, 2017, story discussed how advocates of Michigan’s No-Fault system are pushing for ways to lower car insurance premiums while retaining the integrity of No-Fault and the one thing it provides that no other U.S. state does: unlimited, lifetime medical coverage for auto accident victims.

As it stands now, unfair No-Fault practices like redlining make it so drivers in urban areas like Detroit aren’t treated as fairly as those in the outlying, suburban areas, and are faced with higher auto insurance premiums.

How much higher? Up to $5,000 more.

As I told The Peninsula:

“We’re punishing people for living in Detroit. This is so arbitrary, so discriminatory, that it has literally been outlawed as a practice in other states but it has been allowed to exist in Michigan with the Michigan Supreme Court’s stamp of approval.”

Former State Rep. Brian Banks, who is with the Detroit Alliance for Fair Auto Insurance, agreed:

“What we have seen is that urban and rural areas often times pay more than suburban areas. And that is because of the use of ZIP codes, credit scores, education and occupation. Those are all non-driving factors. They really don’t have anything to do with anyone’s driving ability.”

Why should your career and level of education make you pay more for car insurance?

Banks’ mention of education and occupation touches on another discriminatory practice discussed in The Peninsula article: insurance companies factoring in career choice, level of education and home-owning status when setting car insurance rates. This is something the Coalition Protecting Auto No-Fault (CPAN) pointed out in its recently released study, “Comparing Socioeconomic Status and Auto Insurance Rates in Michigan”:

“Although factors such as job title and whether the driver owns a home are not meaningfully related to a motorist’s risk of loss, Michigan drivers who have working class jobs, do not have a college degree, or rent rather than own their home pay an average of $233 per year more for [basic] auto insurance compared to their white collar peers … On a statewide basis, this represents a 12 percent socioeconomic status penalty.”

As I recently said about the CPAN report:

If using job, education and homeowner status to charge different insurance prices to two equally safe, responsible drivers isn’t discrimination, then what is?

Fraud authority, fee schedules are better No-Fault practices

In my own Michigan auto lawyers blog, I’ve crusaded for the creation of a No-Fault car insurance fraud authority and for medical fee schedules in place for determining how much health care providers can charge when treating car crash injury victims. These would help drive down No-Fault costs, in addition to providing better oversight to the system overall.

D-insurance is a terrible and deeply flawed idea

These are also far better alternatives to Detroit Mayor Mike Duggan’s proposed D-Insurance plan — something I’ve said from the time of its introduction is the worst plan possible for Detroit residents injured in automobile accidents who will need No-Fault protections most.

I explained to The Peninsula that, should D-Insurance become reality:

“Detroit drivers are still going to be paying more for insurance than everyone else, but now they aren’t going to have any protection whatsoever. Now all these people are uninsured and they are going to be dependent on the government — which of course increases taxes on everybody else. And if you know anything about trying to get treatment for a serious brain injury or spinal cord injury from Medicaid, the quality of care is shockingly bad and the waits are shockingly long.”

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