Car Crash 7-8-14

Industry experts and lawmakers agree that high-crime, poor road conditions, and general urban density all play a role in driving the Motor City's premiums to rates higher than even places such as flood-prone New Orleans. But there is disagreement on how much of a factor the states' lack of a cap on PIP claims is when insurers write auto coverage in Detroit.

(Brian Smith)

DETROIT, MI - No matter where the report comes from, few people within or outside of the insurance industry dispute this: Detroit has the highest car insurance rates in the country.

Why that is the case is the source of passionate disagreement among some politicians, insurance industry leaders and advocates for victims of automobile accident injuries in Michigan.

The latest report on car insurance, coming from consumer website InsuranceQuotes.com, says that in metro Detroit drivers pay 165 percent more than the national average for car insurance.

Motor City area drivers' car insurance rates easily outpace the next most expensive metros, including New York City at 36 percent above the national average, followed by Miami at 34 percent and Los Angeles at 25 percent.

"One of the main reasons why car insurance is so expensive in the Detroit area is because Michigan is the only state where car insurance includes unlimited personal injury protection," Laura Adams, a senior analyst for insuranceQuotes.com, said in a release, citing an oft-repeated claim among industry experts and some politicians. "Also, Detroit has a very high percentage of uninsured motorists – as high as 50 percent by some estimates. That unfortunately raises rates for those who do have car insurance."

Michigan is the only state in the country to provide unlimited, lifetime benefits to injured drivers. But while industry-backing groups such as the Insurance Institute of Michigan actively seek to reform this, a group called the Coalition to Protecting Auto No-Fault has been keen on keeping it in place. CPAN includes 25 medical and consumer groups that argue that is in the public interest of Michigan citizens to preserve the no-fault setup, made possible through legislation passed in 1972.

In February, state House Republicans proposed legislation that would cap Michigan's unlimited Personal Injury Protection coverage at $10 million. Metro Detroit leaders voiced opposition to this, as did state Democrats.

Detroit consistently ranks at the top of the nation for auto premiums in study after study, including one by Runzheimer International that is often cited by the National Association of Insurance Commissioners.

Industry experts and lawmakers agree that high crime, poor road conditions, and general urban density all play a role in driving the Motor City’s premiums to rates higher than even places such as flood-prone New Orleans. But there is disagreement on how much of a factor the states’ lack of a cap on PIP claims is when insurers write auto coverage in Detroit.

Meanwhile, efforts to do something - anything - to quell high auto insurance rates have been mostly stagnant.

During his State of the City address, Detroit Mayor Mike Duggan announced the formation of a team to study the matter and even gave the proposed entity a name: D-Insurance. "When I moved from the suburbs to Detroit two years ago, our car insurance went from $3,000 to $6,000," the mayor said at the time. A spokesman for the mayor's office could not immediately be reached Thursday morning for an update on this effort.

David Muller is the automotive and business reporter for MLive Media Group in Detroit. Email him at dmuller@mlive.com or follow him on Twitter