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Detroiters pay steep price for redlining

November 13, 2017 by Steven M. Gursten

Redlining and discriminatory pricing on car insurance in cities like Detroit persists, so what side of the street you’re on makes a huge difference on auto insurance costs — up to $5,000 more in Detroit


Does it matter if a Detroit resident has a spotless driving record and a long history as a safe driver?

Not in the eyes of Michigan’s auto insurance companies, who for years have been charging up to $5,000 more annually for Detroiters’ car insurance policies based on ZIP codes.

This practice is known as redlining. It’s something I’ve spoken out against on the pages of this auto lawyers blog, to the media, and on behalf of Detroit drivers.

Make no mistake, redlining is arbitrary and discriminatory. It’s been banned in many states.

Where a person lives — along with sex, race, credit score history, type of job you have, and marital status — should have no bearing on car insurance rates if you are a safe driver, have not caused any prior car accidents, and pay your car insurance bill on time.

I’ve labeled the practice of redlining in Detroit, Flint, Battle Creek and other cities as “legalized discrimination.” It’s part of a broader civil rights issue, one that causes thousands of people to drive uninsured and suffer devastating consequences under Michigan law if they are ever injured in a terrible car crash. Not only do these people lose the right to collect Michigan auto No Fault benefits, but they cannot even bring a lawsuit for their injuries and pain and suffering against an at-fault driver under Michigan’s auto law.

But redlining has been allowed to exist here. The Michigan Supreme Court practically gives this discriminatory practice that punishes the poor and racial minorities its blessing to continue it.

‘It’s like I’m paying more for my insurance than I’m paying for my car’

Detroiters are paying the price — some of whom explained just how much so in a recent Michigan Radio report about the disparities of an auto owner living on the Detroit side of Mack Avenue on the Detroit/Grosse Pointe border:

“It shot up to close to $500 [upon moving back to Detroit]. So, my experience is horrible. Financially, it’s just terrible because it’s like I’m paying more for my insurance than I’m paying for my car.”

“I actually have a friend right now who’s moving to Columbus, Ohio and his insurance dropped almost $400 a month.”

“For a 2003 Chrysler minivan, I’m paying $189 a month. … But, it’s No-Fault coverage, it’s not for full coverage.”

In Grosse Pointe, however, the difference is 30 to 50 percent less.

Why is there redlining?

Speaking to Michigan Radio reporter Lester Graham, Michigan Auto Law attorney Todd Berg explained:

“Redlining has been outlawed for years, yet the insurance code allows for territorial based rating systems.”

How so? Under Michigan’s Insurance Code, “[i]n developing and evaluating [car insurance] rates, … due consideration shall be given to past and prospective loss experience within and outside this state …” (MCL 500.2110(1))

Additionally, “territorial base rates [can be] used by an insurer in this state” in setting “automobile insurance” prices. (MCL 500.2111(1))

Further, the “neighborhood someone calls home” can be used by auto insurance companies in setting the price for their product:

“[A]utomobile insurance risks may be grouped by territory.” (MCL 500.2111(5))

Can redlining in Detroit ever be stopped?

The recently failed House Bill 5013 — the very flawed Michigan No Fault reform plan pushed  by Detroit Mayor Mike Duggan, House Speaker Tom Leonard (R-DeWitt) and House Insurance Committee Chair Lana Theis (R-Brighton) and the auto insurance companies — did not address redlining or any other non-driving factor.

What is most disappointing is that Duggan was one of the most vocal backers of HB 5013, who said he was doing this to help his constituents — the people who live in Detroit neighborhoods  — so they could pay less for auto insurance.

Well, Mayor Duggan, redlining would have been a terrific place to start, instead of the largely misguided and ineffective proposals that were in HB 5013.

There may be hope yet, though, with the bipartisan, 14-bill No Fault package that’s in the state House. It includes House Bill 5111, which would prohibit an insurance company from using non-driving-related factors in its premium/rates-setting process — including, but not limited to, the territory in which a driver “resides or works,” sex, marital status, race, employment, education level, homeownership, income level and credit score information.

In addition, the Detroit Alliance for Fair Auto Insurance — which formed earlier this year — is committed to combating redlining in Detroit.

I won’t stop fighting to eliminate redlining either. As Todd told Michigan Radio, Michigan’s No Fault system provides the nation’s best medical coverage and benefits:

“If somebody is injured in a car accident, No-Fault PIP pays for all of their medical expenses, it also provides wage loss benefits for up to three years, and it also provides replacement services benefits.”

Every Michigan resident who drives a car and has a safe driving history is entitled to a fair rate on car insurance.

No matter on what side of the city limits sign they live.

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