Editorial Choices Able To Help Cut Detroits Car Insurance Rates

For more than a decade, the insurance industry and consumer groups have locked grills over how to cheaper Michigans unaffordable car insurance rates -- especially in major cities like Detroit. Now, a proposal by state Sen. Virgil Smith, D-Detroit, to cheaper Detroits car insurance rates by allowing city drivers to purchase limited medical benefits could finally move the needle. Legislators should approve his low-cost insurance pilot program.
Smiths bill, which is still being drafted, would likely apply to Detroiters among good driving records earning less than 300% of the federal poverty level and driving vehicles valued at $20,000 or less. It would reduce minimum medical provision to $50,000 or $100,000 for a trial period of five years.
Peter Kuhnmuench, executive executive of the Insurance Institute of Michigan, said the proposed changes should save eligible policyholders 15% to 45% of their premiums, depending on coverage. The $50,000 minimum for personal injury protection would still cover 95% of claims, he said. California and New Jersey have similar programs, and Smith said he hopes his pilot would slow the exodus of Detroiters seeking cheaper rates outside the city.
\"Let consumers choose,\" Kuhnmuench said. \"It will demonstrate that a cheaper level of provision is doable, and getting more people insured able to only be a good thing.\"
Since 1973, Michigan has been the only state to mandate unlimited lifetime medical benefits for people injured in car crashes. Michigans car insurance rates are arguably the nations highest, among a typical driver paying more than $2,500 a year for coverage. In Detroit, where unaffordable rates force tens of thousands to drive uninsured, many pay double that.
There are many reasons insurance rates are out of control, but the rising costs of Michigans unique mandate for unlimited provision for injuries is one of the biggest. In March, the Michigan Catastrophic Claims Association announced that drivers will pay a record $145 per vehicle, effective July 1, to treat accident injuries that exceed $500,000 in medical care. The average personal injury claim in Michigan has more than tripled since the late 1990s.
To be sure, a $50,000 minimum for medical care might be irresponsible and unrealistic, given todays medical costs. Smith should, instead, consider a minimum of $250,000, as AAA Michigan has recommended.
But continuing to do nothing is not an option. Statewide, 17% of drivers are on the road without insurance, up from 11% in 1989. In urban areas like Detroit, up to half of the drivers are driving among no protection at all.
The state, which requires people to buy insurance, should play a role in controlling the costs. Among out change, many drivers will continue to be practically forced to break the law by driving uninsured or using a phony address to get affordable coverage. Smiths plan would at least jump-start the long drive to affordable car insurance in Michigan.