Duggan: Low-cost auto insurance on the way for Detroit

Discounted car insurance — just for Detroiters?

Mayor Mike Duggan pledged today he'd make it happen.

More than a year after Duggan first proposed creating low-cost car insurance for Detroiters, he suddenly announced before an audience of nearly 800 at Cobo Center that he'd "roll it out next week."

Duggan spoke at today's Leadership Luncheon, the 16th-annual gathering of business and community leaders who support revitalizing 8 Mile Road. Amid a wide-ranging discussion of regional issues, which veered into citing the high cost of vehicle insurance statewide, Duggan cited his plan but gave no details.

"The police tell me that half the people they pull over (in Detroit) don't have insurance. We're going to come forward with a single plan to offer lower-benefit, lower-cost insurance," Duggan said.

Seated beside Wayne County Executive Warren Evans, Macomb County Executive Mark Hackel and Oakland County Executive L. Brooks Patterson, Duggan brought up the subject amid a discussion by the others of Lansing lawmakers' latest effort to overhaul Michigan's no-fault auto insurance system. The state House is considering a bill rushed through the Senate last week — the third time in two years that legislators have tried to change the insurance law.

Patterson and Duggan said they firmly opposed the proposed overhaul in Lansing, with Duggan adding, "I'm trying not to have my proposal caught up in this bill."

In Duggan's first State of the City speech, in February 2014, he proposed creating "D-Insurance" — a city-sponsored insurance company that he said could offer lower rates to Detroiters. In November, the Detroit City Council approved a $75,000 contract for a consultant to study the feasibility of creating a city-sponsored insurance provider and to determine why vehicle insurance costs so much in the Motor City. The consultant's report has yet to be released, but such a program would be unique among large American cities, according to insurance-industry experts.

A nationwide survey in February by the nonprofit consumer web site called CarInsurance.com found that car insurance for a driver with a clean record averaged more than $5,000 a year if the motorist lived in Detroit, compared with $1,500 to $2,500 for suburbs around the city. The rates charged Detroit's residents were the highest found by CarInsurance.com among any major U.S. city.

Detroit Councilman Scott Benson said he expects the new plan to require the council's approval.

Duggan's plan to reduce rates could remove a barrier to more people moving to Detroit.

"It's a huge burden and that's why we have so many uninsured that are, in the vernacular, driving dirty," Benson said. "This is going to be a huge way to alleviate some of that financial burden in the city of Detroit."

Rate relief can't come fast enough for Detroiters like Veronica Thomas, a full-time worker and single mom who said she recently sought quotes for insurance on her 2010 Hyundai Elantra.

"I had three quotes, and just for no-fault, it was $400 a month," she said Friday. "I'm 53. I have no points, no tickets. I've been driving since I was 19. And just because I live in Detroit? It's really ridiculous."

Thomas said the insurance company reps told her that Detroit has high rates of auto theft, insurance fraud and accidents, jacking up premiums, but she doesn't understand how that could justify rates that make it difficult to afford to live in the city.

"My car insurance would be twice my car note, and it doesn't make sense," she said. "It's why we have so many people in Detroit driving without insurance."

Boosters of the proposed insurance overhaul in Lansing promise it will lower Michigan's car-insurance rates, some of the highest in the nation. But a key concern among some lawmakers — especially those in Detroit — is that it contains no guaranteed rate relief for motorists. In the past, Democrats have tried unsuccessfully to get bills passed that would prohibit insurance companies from using credit scores and ZIP codes to set insurance rates. Duggan said at today's meeting that there seemed to be "nothing you can do" to eliminate the use of a motorist's home address by insurance companies when setting rates.

The wide ranging discussion by the region's Big Four leaders took in far more than insurance. It began with U.S. Sen. Gary Peters praising steps toward revitalizing 8 Mile Road. Peters told the room of mayor, city council members, township officials, business executives and county leaders that their goal should be making 8 Mile into "a seamless corridor uniting city and suburb."

Evans, embroiled this week in opposition from employee unions over proposed benefit cuts, defended the urgent need to balance Wayne County's budget. "From top to bottom, everybody's going to feel the pinch," he said.

The group's three Democrats – Evans, Duggan and Hackel – each said he would vote yes on Proposal 1, the controversial road-and-school-funding ballot proposal that Michigan voters are to decide May 5. The lone Republican, Patterson, said he would not.

Alluding to the complexity of the proposal and varied needs it would address, Patterson quipped that Lansing lawmakers "hung too many ornaments on that tree."

Gov. Rick Snyder, also in the GOP, has repeatedly endorsed the proposal but has had lukewarm support from other Republicans.

Both Evans and Hackel qualified their support by agreeing with Patterson's wish for funding formula dedicated solely to roads. That led moderator Charlie Langton of WJBK Fox 2 to ask Patterson: "Well, what about pot for potholes? – Everybody says, 'Let's have a marijuana tax!' What about that, Brooks?"

Patterson, pretending to inhale on a marijuana cigarette and using slang to refer to it, quipped: "Hey, man, who cares about the roads. Want a doobie?" The crowd broke into laughter as Patterson, from his wheelchair, seemed to be trying to hand the imaginary doobie to Hackel, who grinned widely.

Each of the four then said he opposed legalizing cannabis. Moments later, when the other three said they favored gay marriage – to applause -- Patterson said he opposed it because "I'm a traditional guy," then cracked up the audience again when he called his speaking companions "pot-happy, gay-loving guys."

Today's luncheon had a record turnout for the annual fundraiser, at $60 a ticket, for the 8 Mile Boulevard Association, said Executive Director Jordan Twardy. The nonprofit group includes business executives, civic leaders and local officials from Wayne, Oakland and Macomb counties, the 13 communities that border 8 Mile from St. Clair Shores to Farmington Hills, and the state of Michigan, Twardy said.

Contact Bill Laitner: blaitner@freepress.com or 313-223-4485. Staff writers Matt Helms and Joe Guillen contributed to this report.