DETROIT (WXYZ) — Detroit has the highest auto insurance rates in the nation, according to a new study by Bankrate. Detroit, Warren, and Dearborn are included in the findings.
The study found:
"Detroit drivers pay on average $5,687 for full coverage car insurance each year, which accounts for approximately 7.98% of their median household income."
"To compare, the national average cost for full coverage car insurance in 2024 is $2,543 per year, which is 3.41% of the median U.S. household income."
7 Action News spoke with the author of the study and Detroiters about their rates.
“How much we paying right now? Close to $4,000," Detroiters Tyrone and Ramona said the amount in unison.
"Two cars. Six months (for the $4,000 payment). That’s half a year," he explained.
“We paid $800 for one car before for full coverage, and they went up to $900. So, we had to switch," Ramona chuckled.
She laughed, but Ramona and Tyrone said car insurance can be, at times, a financial burden.
“We gotta eat. We gotta pay DTE," Ramona said.
They said they were not surprised to learn about the study's findings.
Osama Elayan tells 7 Action News he moved from Dearborn to Allen Park. That's about seven miles.
Elayan said, “It was a pretty significant decrease in my insurance payments. So, definitely noticeable.”
7 Action News spoke with Bankrate analyst Shannon Martin who authored of the study. She explained what makes Detroit stand out from other metropolises.
"With Detroit, in particular, there is a real increase in car thefts that are happening," Martin said.
That impacts auto insurance rates.
Martin said, while state legislation passed in 2019 did lower auto insurance rates, times have changed since 2020 and insurance premiums are reactionary.
“A lot of events happened in a short period of time. Inflation impacted the cost of vehicle parts, medical supplies, there was a labor shortage, product shortages, extreme weather caused lots of claims to go through," she explained.
Of the 'life events' that impact a driver's rate, she said a lapse in coverage and insuring a teenage driver are among the most costly.
Also, while it’s illegal in Michigan for auto insurers to use credit scores to determine rates, they may use information that influences credit scores.
Doug Heller is the director of insurance for the Consumer Federation of America.
“People in Detroit pay so much for auto insurance, so I don’t want to take that lightly. You have to recognize that there is a public policy problem," he said.
Heller said, "The legislature (and) the governor, have not done enough. The regulators at the Department of Insurance and Financial Services have not done enough to protect drivers from the unfair pricing that we see in the auto insurance market.”
At the same time, Heller said consumers can’t wait around for legislators to reform the industry. He said shopping around and getting quotes from different companies can still help and to do so at least once a year.
But Heller warned, “You can look to reduce your coverage, but you’re not going to have the protection you need if you reduce your coverage."
Tyrone said, "Something gotta be done. It don’t make sense."
Ramona added, "If you want everybody to be legal driving because you can still get a car and just get insurance for seven days and just be out here illegal and nobody wants to do that.”
Erin McDonough, executive director of the Insurance Alliance of Michigan, shared the following statement with 7 Action News regarding auto no-fault coverage.
McDonough wrote, “Michigan drivers have saved over $6.5 Billion since bipartisan reforms were passed in 2019 [michigan.gov] and several independent reports and rankings have shown Michigan is no longer the most expensive state [insurify.com] in the nation for auto insurance despite having the most generous auto insurance medical coverage in the U.S. Part of reform was giving Michiganders choice over the level of personal injury protection (PIP) coverage that drivers can buy and putting in place cost controls on what medical providers can charge after years of rampant overcharging."
"As shown by Bankrate, mandated unlimited PIP coverage can dramatically affect the cost of insurance. That is why data from our members shows in Wayne County alone more than 389,000 drivers have selected PIP coverage other than unlimited. This, coupled with the medical cost controls, have made auto insurance more affordable, as evidenced by Michigan experiencing the largest decrease in uninsured drivers [linkprotect.cudasvc.com] in the nation. The bottom-line is bipartisan auto no-fault reforms continue to curb costs for Michigan drivers at a time when the high cost of everything continues to be a burden for families. We urge policymakers discussing no-fault reform to avoid adding costs back on Michigan families when they can least afford it," she stated.
