In Detroit, most notably east of Woodward Avenue and north of the cities of Hamtramck and Highland Park, Citizens set multiplier “factors” for PIP, bodily injury and property damage at anywhere from 4 to nearly 7. Even if someone drops PIP coverage, these motorists there would still face bills that are quadruple or higher than most of the state outside metro Detroit.
Meanwhile, most suburban and outstate motorists get a discount — paying substantially lower — because of where they live.
In parts of suburban Grand Rapids, for instance, that can result in savings of 40 percent or more. A few other places, including Southfield and parts of Pontiac, Flint, Saginaw and southern Macomb County — communities, critics note, with high proportions of African-American residents — face elevated rates like those in Detroit.
The new law bans insurers from using a driver’s FICO credit score, gender, marital status, occupation, education attainment or homeownership status to set rates. But insurers can still manipulate rates using other credit rating systems and factors like age or driving record.
Under Citizens’ filing, if the starting point for a premium— after driving record, age and gender were applied – was $1,000, that would mean a Detroiter would pay $6,690 and the person in suburban Grand Rapids would pay $520 for PIP coverage, based on Citizens’ insurance filings.
And they’d pay triple or quadruple for bodily injury and property damage while someone in the Detroit suburb of Farmington Hills would get an 8 percent to 10 percent discount for those coverages.
Citizens writes policies in Detroit but “did not previously use ZIP codes as a rating factor, and therefore did not need to change its procedures in response to the new law,” Clark said.
“There are many factors, in addition to territory factors, that influence premiums and they cannot be viewed in isolation. Thus, an increase in one specific factor doesn’t directly correspond to an increase in premium.”
A review of Auto-Owners territorial ratings showed similar differences: Detroiters still face far higher rates, often triple what is charged outside the city.
AAA has not made its new rates public.
The new law allows insurers "to pinpoint their discriminatory pricing even more precisely” than zip code, said Doug Heller, a national insurance expert who studies Michigan filings for the Coalition Protecting No-Fault Auto, a group that opposed the reform law.
"That will eventually be revealed when people start finding out what they and their neighbors are paying."
Not every insurer has gone with smaller geographies, however. Farmers Insurance, for instance, has taken a different approach: It had used ZIP codes to set rates but will start using municipal boundaries next month.
In Detroit, that means some will see a distinct savings — and others a big increase. Before, Farmers’ highest PIP multiplier factor in five Detroit ZIP codes was nearly 4 and the lowest, in far northwest Detroit, was 1.1. Now the entire city is set at 3.2.
Reform advocates say coverage choices allowed under the new law will allow more Detroiters to afford some form of auto insurance and reduce the number of drivers who risk criminal penalties for driving without coverage or claim false addresses outside the city to secure lower rates.
Statewide, only about one-third of the Citizens customers who have already signed up for new policies that take effect July 2 have chosen to stick with unlimited medical coverage, according to Clark.
The "vast majority" are buying policies with $500,000 or $250,000 in personal injury protection, she said.
Risk and reward
For most Michigan drivers, how much they save under the new law will come down to how much personal risk they are willing to assume.
Drivers who buy policies with $500,000 in personal injury protection will see the medical coverage portion of their bill drop by 22 percent on average, even when factoring in the new "default" increases for bodily injury liability coverage, according to an analysis of both public and confidential filings by the state Department of Insurance and Financial Services.
The savings could be even larger for households in which all family members have Medicare or private health insurance policies that cover auto accidents with an individual deductible of $6,000 or less. Drivers who provide their auto insurers with proof of that health coverage can opt out of personal injury protection altogether.
Motorists who choose lesser coverage are “playing Russian roulette, and they're betting that if they get in a car crash, they will not be seriously injured,” said Stephen Gursten, a personal injury attorney with Michigan Auto Law in Farmington Hills and a critic of the new law.
While health insurance will cover direct medical bills arising from car crashes, injured drivers that choose cheaper auto policies will receive inferior long-term care, said Margaret Browning, an attorney who serves as a legal guardian for catastrophic crash victims.
One of her wards, 23-year-old Patricia Ward of Fenton, was severely injured in a 2016 crash and is unable to speak, eat any food by mouth or walk. With more than $2 million in costs covered through her auto policy so far, she lives in a residential rehabilitation home that specializes in brain injury recoveries and is in speech therapy, with the hope of some day being able to talk again, Browning said.
Another, 32-year-old Cristina McVeigh of Riverdale, did not have auto insurance when she was severely injured in a 2017 motorcycle crash. Medicaid has not covered continued speech therapy and other possible treatments, Browning said of McVeigh, who lives in a nursing home and spends most of her days "in bed watching television."
"Both of these girls are trapped in their own bodies,” Browning said, “but Patricia may get the key. She may be let out."
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New Michigan auto insurance: savings for most, but Detroit still pays more - Bridge Michigan
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