Car
insurance plan to help residents in cities - Auto-Owners lowers premiums
Auto-Owners Insurance Co., one of Michigan's largest insurers, has agreed to
participate in a state-initiated program to cut insurance rates for low-risk drivers
and homeowners who live in urban areas.
Today in Detroit, Gov. Jennifer
Granholm is to announce the partnership between the Delta Township insurance company
and nonprofit community groups in Detroit and Flint.
Starting this week,
metro Detroit and Flint residents who have good driving records will be able to
buy insurance policies through local Auto-Owners agents and receive an automatic
10% discount off the insurer's usual rates. Additional rate cuts are possible
based on individual cases.
The insurance rate-cut program was announced earlier this summer;
about 5,000 people have filled out surveys to see whether they're eligible for
the discounts, said Leslee Fritz, a spokeswoman for Granholm.
The state
offices of Community and Faith-based Services and Financial and Insurance Services
and the nonprofit community groups Metro Group Quality of Life Improvement Association
in Detroit and Unification for Urban Equality in Flint negotiated with four insurance
companies that competed for the business.
Auto-Owners got the job.
"If
a community struggles with a problem, then the community must come together to
solve it," said the Rev. Charles Adams, pastor of Hartford Memorial Baptist
Church in Detroit. "For too long, Detroit residents have paid more for insurance
solely because we live in the city. We are committed to changing that."
Insurance
in Detroit often costs twice as much as a comparable policy in a nearby suburb.
High insurance and high taxes are key reasons people cite for leaving the city.
Insurance
companies have been able to charge territorial rates in Michigan since 1979. Under
territorial rates, Michigan and most other states use people's hometowns, driving
records and homeowners' records to determine rates. That leads to higher insurance
costs in communities that have more crime and more traffic accidents.
The
insurance industry has said that where people live is a crucial factor in their
risk of having accidents, having a car stolen or having a home vandalized or burglarized.
Eliminating the geographic factor would result in higher rates for everyone, the
companies say.
"Environmental factors affect the potential risk to
drivers as well. Theft rates and roads that are in disrepair do impact your experience
as a driver," said Peter Kuhnmuench, executive director of the Insurance
Institute of Michigan. "We feel the industry is, quite frankly, better prepared
and able to ascertain the risk of individual drivers."
Basing insurance
prices on location -- often called redlining -- has been a hot-button issue for
years. When she was running for governor in 2002, Granholm said she would put
an end to territorial rates.
Today's announcement, just eight weeks before
the Nov. 7 election, could give Granholm's re-election bid a boost in the Democratic-leaning
areas where turnout could be a key factor in the election.
