MELISSA BLOCK, HOST:
The city of Detroit has lots of challenges, right down to the high cost of car insurance. Drivers there pay some of the highest rates in the nation. NPR's Jason Margolis reports on a proposal by Detroit's mayor to change that.
JASON MARGOLIS, BYLINE: Let's to cut to the chase - how much? How much does auto insurance cost in Detroit? For an estimated 50 to 60 percent of Detroit drivers, it's actually a very good deal.
WAYNE MILLER: They're paying nothing because they don't have insurance.
MARGOLIS: Wayne Miller is an adjunct professor at Wayne State University Law School in Detroit. He studies insurance and says Detroiters have found other ways to game the system.
MILLER: People commit fraud by trying to claim their car is garaged in suburban Southfield or Farmington Hills and get a lower, suburban rate.
MARGOLIS: If they get caught after an accident though, bye-bye benefits. All this drives-up rates for people like Bob Ennis. He plays by the rules, insuring his Ford truck in Detroit.
BOB ENNIS: We pay approximately 3,200 for full coverage a-year.
MARGOLIS: He's lucky. The average Detroiter forks over somewhere between 3,400 and $5,000 - estimates vary. I told Ennis what I pay to insure a similar vehicle just outside of Boston.
ENNIS: See, that really hurts. (Laughter). That's - yeah, I pay double that. Well, triple almost - triple just 'cause the Detroit address.
MARGOLIS: There are other reasons rates are so high here. Consider the case of Howard Goodwin, Jr.'s Jeep Cherokee.
HOWARD GOODWIN JR.: I didn't even put a hundred miles on it and it was stolen from the side of my house the first day I got it. That car was stolen three more times.
MARGOLIS: Detroiters also pay more because Michigan has the most generous benefits in the nation. If someone here gets in a crash, their medical bills are covered forever no matter who is at fault. Twelve states have this no-fault system. Michigan is the only one with unlimited medical coverage. Peter Kuhnmuench, director of the Insurance Institute of Michigan, says medical providers are taking advantage of the situation.
PETER KUHNMUENCH: Today, if you're familiar with - especially hospitals, they have something called the charge master rate. And I describe it as a suggested retail price on steroids.
MARGOLIS: Health insurance carriers routinely negotiate lower rates from there. But in Michigan, auto insurance carriers can't do that, they have to pay the charged rate. So, Kuhnmuench says, medical providers shift costs to auto coverage because they get paid more. Detroit Mayor Mike Duggan's auto insurance would cap coverage at $275,000. Kuhnmuench likes the mayor's insurance plan. He says the number of uninsured drivers in Detroit is unnerving.
KUHNMUENCH: You're playing Russian roulette if you're uninsured, but it becomes a matter of affordability.
MARGOLIS: The mayor says his plan would make insurance more affordable, $1,000 less on average. Wayne Miller, the law professor at Wayne State, doesn't support the mayor's plan because there's no guarantee that premiums would actually go down.
MILLER: The way I would say it for publication is, the great Republican president Ronald Reagan said trust but verify. And we have no effective way of verifying insurers' claims about what goes into their rate-making.
MARGOLIS: A coalition of consumer groups is trying to force the insurance industry in Michigan to open its books and show why no-fault insurance costs have gotten so high. The case has gone to the state supreme court. The mayor's plan would have to pass through the state legislature. It has early support but local lawmakers are opposing the idea. Jason Margolis, NPR News, Detroit.
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