Seeing red: some of the state’s poorest pay the highest insurance rates

A Detroit insurance tax?

Motorists in Detroit pay the highest auto insurance premiums, according to filings with the state insurance department. In the map below are the Census tract-level "factor" differences in personal injury protection -- typically he most expensive component of a drivers' insurance premium -- for AAA of Michigan for 2015. They show either the discount or the additional amount motorists are charged depending on where they live. Zoom in on Metro Detroit to see how high rates are affected.

Source: State rate filing by AAA of Michigan.

Motorists in Detroit pay as much as seven times what motorists elsewhere would pay, no matter their driving record, age, gender or credit standing. Insurance companies say that's because the city has higher claim rates and claim costs.

State Sen. Coleman A. Young II isn’t buying it. "This map is as discriminatory as it is disgusting," Coleman wrote to Bridge after being sent copies of the map. "This is the definition of redlining. I'm stunned and furious."

Redlining is the practice of charging different rates to residents of some geographic areas based on the race or ethnicity of the population.

When mapped, the differences are stark: In much of the state, motorists are given a discount on personal injury protection, the largest single portion of a premium. In parts of Ottawa and Cass counties in western Michigan, motorists get their personal injury premiums cut in half from the base rate because of where they live. Yet in parts of Detroit and three Census tracts in Dearborn, motorists pay 229 percent more than the base rate.

Here’s an example: if the baseline personal injury premium in the state was $1,000, it would cost $470 in the discounted Ottawa and Cass Census tracts, yet $3,296 in those high-cost areas of Detroit and Dearborn.

Huge differences are just miles apart: In southwest Detroit, motorists are charged double for living there yet just a few miles south in Wyandotte, motorists get a 20 percent discount for the same coverage.

Michigan used to have limits on territorial rate differences, but abolished those limits in 1996. Now, insurance companies can charge more -- or less -- based on ZIP codes or Census tracts.

Bridge looked at the state filings of Allstate and AAA of Michigan, and both showed similar patterns of rate differential based on geography. The companies say they face higher claim costs in those areas.

Facts matter. Trust matters. Journalism matters.

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Steve Smewing
Thu, 07/02/2015 - 10:43am
For me it does not help that the legislature created a protection without teeth. I pay a higher rate due to a poor credit score. My credit score previous to falling into a depressive state was always around or above 700, for my whole life. Once I was not able to hold a job, I was not able to pay my debts. I could not even file bankruptcy I had nothing to reorganize , so nothing to take in income. State law says that if a person falls on hard times but was otherwise a good credit risk that an insurer cannot use a credit score to increase rates. The trouble is that is all it says. It's a law that says don't do it and no or else. When I told my insurance carrier about the law and that I qualify, they could not find anyone that knew what to do about it let alone have anything in place to cover the situation.
Thu, 07/02/2015 - 11:41am
It is ridiculous to say that rates in Detroit should NOT be higher, even the police chief there was almost car-jacked! Let's get real and face the facts. If you drive your nice car to Detroit, you could very well be walking back home!
Regina I.
Tue, 07/07/2015 - 11:19am
Easy for you to say. You don't live nor work in Detroit. I don't like that my premiums could than my rent and car notes.
Jim hendricks
Thu, 07/02/2015 - 12:34pm
Fabulous and informative map! One of the reasons I am now contributing.
John S.
Thu, 07/02/2015 - 11:02pm
It's a fascinating map. I'd like to see another one for millages. Small wonder people move to Livonia: low PIP; low millage; decent schools; decent housing--"life is good." If economic theory is correct, all of this stuff is capitalized into real estate prices. That's why housing tends to be inexpensive in the City of Detroit. Still, despite inexpensive housing, middle class people in Detroit get soaked. I can imagine their pain while they watch their pay checks quickly eaten up by auto insurance, property insurance, property tax payments, and maybe even private/parochial school tuition. The mayor needs some help to make the City more affordable for middle class residents and reducing auto insurance rates is one step in that direction. The city won't turn around until the bleeding of middle class tax paying residents is halted and reversed.
Thu, 07/12/2018 - 7:16pm

The rates are fair! As an agent in Detroit for 23 years I see the assault claimants make on Insurance companies. It is financially horrifying. For instance, I remember 1 particularly incident when a person called me 5 minutes to closing time.He came in without the car and promised to come back with the car. That night with a binder, he called in a with a $40,000 claim because I trusted him and try to accommodate him.
These are not things we are previliged to share about the Detroit market. Its easy to put numbers out there to confused the public but it would great to let the insurers give the raw numbers behind the carnage.
It is true that fraud is high especially for the uninsured section of the policy .