Prices vary wildly from one side of intersection to the other

Barrier to economic upward mobility for Detroiters

Unchecked medical treatment costs a factor

The intersection of Moross Road and Mack Avenue has always been thought of as a dividing line between Detroit and Grosse Pointe, between black and white, working class and elites.

But when it comes to auto insurance rates in Michigan, it's the intersection of public policy and a penalty for living where you can afford to buy or rent a home.

Within a 10-block radius of Moross and Mack, AAA of Michigan has six different auto insurance base price ratings.

And the price you pay — before nondriving factors like age, gender and credit score are thrown into the mix — all depends on which side of the border you live on.

On the southeast corner of the intersection in Grosse Pointe Farms, car owners in that tony neighborhood behind Kerby Field get a 48.1 percent discount on the base rate AAA charges for personal injury protection, the most expensive portion of auto insurance, according to the insurer's pricing data filed with the state.

Across the busy intersection of Moross and Mack on the southwest side of the street in Detroit, a car owner who lives on Chandler Park Drive in Detroit's leafy Cornerstone Village neighborhood gets charged 54.8 percent above AAA of Michigan's base rate for personal injury protection. Collision costs 25.6 percent more.

You want comprehensive to cover the cost of repairing nicks and scratches to your new car in Detroit? That'll be an extra 243 percent, please.

Six blocks east, back in Grosse Pointe Farms, drivers of the same exact vehicle get a 7.7 percent base rate discount on comprehensive coverage.

These pricing disparities by neighborhood-level census tracts are what's known as territorial rating — a system that lets auto insurers charge wildly different rates based on accident claim history in that area.

And it's all perfectly legal in Michigan.

Using AAA's territorial pricing, if the base rate for personal injury protection is $1,000, the driver on the Detroit side of Mack Avenue pays $1,548. Across the street, the Grosse Pointe Farms driver pays $519 for unlimited medical coverage — a $1,029 price swing for the same vehicle.

"How do you do that? How do you have that large of a difference?" said state Rep. Sherry Gay-Dagnogo, a Detroit Democrat. "They're getting penalized for where they live."

Gay-Dagnogo, a second-term representative from Detroit's west side, has been swimming upstream lately in auto insurance reform.

She's trying to get Republican legislators and Mayor Mike Duggan to take an interest in banning territorial pricing in auto insurance as part of the reform package in House Bill 5013.

Oakland County Executive L. Brooks Patterson has become a surprising Republican ally to Gay-Dagnogo, calling ZIP code-level pricing "classic redlining" that should be outlawed.

"I don't know how you can define redlining any better than what they've done in Detroit," Patterson said of insurers.

Last Thursday, the GOP-dominated House Insurance Committee rejected Gay-Dagnogo's amendment to prohibit all factors unrelated to a person's driving record as a variable in determining insurance prices. The amended bill was sent to the full House, where it could see action this week.

Duggan is focused squarely on trying to reduce the escalating medical costs in the system and has said getting rid of nondriving factors like credit scores and territorial ratings is "not politically possible."

The reality is, if the territories went away tomorrow, the higher prices for residents of Detroit, Dearborn, Hazel Park, Southfield, Warren and even swaths of Sterling Heights would likely be spread out to other drivers in Patterson's Oakland County — and beyond.

That's because simply getting rid of the territories doesn't bring down the cost of unchecked medical treatment costs, which Crain's found tripled per injured motorist between 2000 and 2013.

But Gay-Dagnogo is not convinced, in part because auto insurance claims data for individual ZIP codes and counties is a closely guarded trade secret.

"How do we know where the claims are coming from?" Gay-Dagnogo asked. "We're just supposed to take their word that there's too much fraud in 48227?"

AAA did not make a company executive available for comment. Executives at auto insurance companies in Michigan have declined comment in recent weeks on their business practices, referring questions to their industry lobbyist in Lansing.

Pete Kuhnmuench, the industry's main lobbyist, acknowledges that some territorial prices can simply be higher because "a couple of really bad drivers in an area" ran up the collision and medical bills.

"Their rates are based largely upon their experience in those territories," said Kuhnmuench, executive director of the Insurance Institute of Michigan. "It's not related to the driver per se, but the environment they're in."