Video Tuesday: Michigan State Senator to Introduce Cheap Car Insurance Alternative

Posted & filed under Car Insurance, Michigan Car Insurance.

Detroit, Michigan is the most expensive city in the U.S. in which to insure a car.  It’s not even close.  According to the Insurance Information Institute, average car insurance premiums in Detroit are $5,948 / year, which is over $2,000 more than the next most expensive city – New Orleans.

There are several reasons why car insurance is so expensive in Detroit: the crime rate in the metro area, the number of uninsured motorists, and (most importantly) the fact that Michigan is one of the only states requiring uncapped personal injury protection coverage.

A Detroit area State Senator, Virgil Smith, is set to introduce legislation that could lower car insurance premiums for low income Detroit residents by as much as 30%. The proposed legislation is similar to California’s recently enacted Low Cost Automobile Insurance Plan. Essentially, the proposed legislation would provide a means test for auto insurance rates, and would require that any covered driver have a good driving record:

Under Smith’s plan, auto insurers could offer a stripped-down policy without unlimited medical coverage to Detroit residents who make less than $30,000 a year, drive a vehicle worth $20,000 or less and have a clean driving record.

The legislation would lower minimum personal protection coverage to $50,000 or $100,000 for a five-year trial period and, Smith hopes, cut insurance costs to as little as $1,000 a year for qualifying drivers.

…Smith’s program would start in Detroit, but it could eventually expand to the rest of the state.

Sen. Smith provides more details in an interview:

Low-Cost Auto Insurance Could be on its Way to Detroit: MyFoxDETROIT.com