Detroit Mayor Makes The Case For Car Insurance Reform

Michigan’s no fault auto insurance system is the only model in the US that includes unlimited medical coverage.  The system is particularly troubling for Detroit residents where auto insurance premiums are higher than in any other jurisdiction in the country.

Detroit Mayor Mike Duggan has made lowering auto insurance rates for city drivers a key part of his municipal agenda.  Duggan drafted a new plan for Detroit residents called the D-Insurance plan that, if supported by the Michigan legislature, would put a limit on medical coverage for Detroit drivers and translate into lower auto insurance rates.

Duggan took his bill before the state legislature in Lansing, and pleaded that reform is necessary to help Detroiters.  According to Duggan, the average annual car insurance premium charged to Detroit drivers is $3,400 – more than double what motorists in surrounding Michigan counties pay.  He told the legislature that the country’s highest car insurance premiums force Detroiters to seek alternative means of getting to work, if possible or illegally drive as uninsured motorists.

“There is no issue of more concern to the average Detroiter today than the issue of car insurance.”

The D-Insurance bill will impose a limit on the unlimited medical coverage clause at $250,000 for hospital expenses.  Another $25,000 will be applicable for drivers who seek rehabilitation therapy at medical clinics other than hospitals. 

Detroiters who choose a D-Insurance plan will not be required to pay into the Michigan Catastrophic Claims Fund, saving a minimum of $186 per vehicle annually on car insurance.  However, drivers who choose this option will be excluded from unlimited medical coverage, and could be forced to pay out of pocket if rehabilitation expenses exceed $250,000.

Duggan’s case was met with mixed reception in Lansing.  Senators who represent counties that neighbor Detroit were skeptical that D-Insurance can be restricted to Michigan’s largest city, and expressed concern that residents in their own constituencies might demand a D-Insurance plan.

On the other hand, the car insurance industry agreed with many of the principles presented by Duggan.  Tom Shields, a spokesperson for insurers through the Coalition for No Fault Reform, agreed that medical claims in Michigan and especially in Detroit are causing car insurance premiums to skyrocket.

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