Duggan lays out cheap insurance plan for Detroiters

Mayor Mike Duggan will ask lawmakers to approve cheaper insurance plans for Detroiters that would offer lower benefit levels as a way to cut down on highest-in-the-nation premiums residents pay just for living in the city.

Duggan's plan would provide a minimum $25,000 in personal injury protection and cap catastrophic medical coverage at an additional $250,000, Duggan said Wednesday night at a town hall meeting at Historic Litlte Rock Missionary Baptist Church. Health care costs beyond that level would be the responsibility of a driver's health insurance provider, the person said.

Nuances such as how that would play into Michigan's current insurance laws — including the lifetime insurance benefits provided for drivers with catastrophic injuries — weren't immediately clear. Duggan said that drivers with the lower-benefit insurance would have the option to buy additional catastrophic claims coverage.

Duggan revealed the details at a community meeting tonight for residents of the city's 5th District.

Duggan told a packed crowd that the insurance issue has been the most complicated thing he's ever worked on, and his proposal represents "the only thing I think we have of getting through the Legislature."

State Sen. Virgil Smith will introduce what he called the D-Insurance bill, and he said he was confident he'd be able to win approval in both chambers of the Legislature.

"I know we can get this done," he said. "Auto insurance is something that has plagued us for over 30 years."

Duggan said he thinks the bill could knock $1,000 off the average annual insurance bill, which, according to industry studies, averages about $5,000 a year in Detroit.

Duggan said that if the bill is approved, the city would put out competitive bids for insurers to provide the insurance to Detroiters. Far from calling the idea a bargain-basement insurance plan, Duggan said that the personal injury protection insurance would still provide more insurance benefits than 48 other states require. After the cap of $275,000 for hospitalization and after-care is exhausted, costs for medical care would be borne by drivers' health insurance providers, ranging from Medicare, Medicaid, Blue Cross and plans offered through the Affordable Care Act.

Duggan said he believes Gov. Rick Snyder is on board with the plan, and he's been meeting with lawmakers to garner support for it.

Still, Duggan's plan will face a road block in the Legislature, especially within the Detroit delegation. The Detroit caucus in the House of Representatives is united in its opposition to the plan.

"Driving with no insurance is better than D-Insurance," said state Rep. Brian Banks, D-Detroit. "I commend the mayor for his efforts to reduce auto rates in the city. But he's offering Detroiters second-class, watered down insurance policies with lowers benefits."

The Duggan plan will open up non-Detroiters, who are involved in accident with city residents, to lawsuits from people who run out of benefits and are losing wages under the D-Insurance plan, Banks predicted. And city residents would still be on the hook to pay for damages to their vehicles, because the D-Insurance plan doesn't include collision coverage.

"They'll say 'I can't afford to get my car fixed,' but they'll still have to make the car payment," he said. "Then their wages will get garnished. It's just a big domino effect."

Sen. Smith took issue with Banks' characterization, saying that Detroiters would still have full collision coverage and that the only difference would be lower amounts of health care provided by auto insurers.

Sen. Coleman Young, D-Detroit, said the plan is based on misplaced trust in the insurance industry to offer low rates for Detroiters.

"That's a hell of a lot of trust to put in insurance companies who haven't been particularly forthcoming," he said. "I'm not saying that this isn't well intentioned because I think it is. But Duggan is coming at this in good faith with the insurance industry, which is operating in any way but that."

State Rep. Stephanie Chang, D-Detroit, said all Detroiters want their insurance rates lowered, "But we want to make sure that residents don't have inferior coverage."

Detroit residents pay the nation's highest insurance premiums, averaging $5,000 a year, about $1,100 more than the city with the second-highest rates, Brooklyn, N.Y., according to nationwide survey by the consumer website CarInsurance.com.

DelShawn Farver lives on Detroit's west side and says he feels relatively lucky. He pays about $2,800 a year for insurance on his 2010 Kia Forte.

"It could be a lot better," said Farver, 38, a recording analyst for Title Source. "It's mostly based on your ZIP code. I've yet to have used it, to make a claim for anything, so I'm just paying into it."

Despite the added costs of living in the city, he said he doesn't plan on moving anytime soon, calling right now an exciting time to be in Detroit as it works toward rebuilding downtown and its neighborhoods.

"It hasn't gotten to the point where I've considered leaving the city," he said. "I love living here. But it would definitely be good to get a break in that department."

The high rates in Detroit are blamed for the high numbers of uninsured drivers in the city, and for pricing people out of owning a car. It's also cited by many who move out of the city as the reason for relocating.

Contact Matt Helms: 313-222-1450 or mhelms@freepress.com. Follow him on Twitter: @matthelms. Staff writer Kathleen Gray contributed to this report.