Detroit City Wire

Michigan’s drivers will soon be enjoying reforms in the area of auto insurance in early July, with those willing to take some risks experiencing the only benefits, Bridge Michigan reported. 

Due to some new reforms, drivers will be given the option to choose insurance policies that lack medical coverage altogether or have only limited coverage. Michigan residents who reside in Detroit, however, may be disappointed by the reality that the new laws will not do much to stop rate disparities. 

The new reforms, simply put, allow individuals and families to opt out of medical benefits coverage on their auto insurance policies, as long as the entire household has health insurance that covers auto accident injuries. 

Formally, the law says that insurers cannot set rates based on the zip code of where a customer lives, but insurers are still allowed to set rates based on even smaller territories.

Rep. Sherry Gay-Dagnogo (D-Detroit) called the zip code ban a farce. “There was no real attempt to address the redlining aspect that many African-American communities, and more specifically the city of Detroit, suffer from,” she told Bridge Michigan.

The new law may tempt some residents to switch insurance providers, but those who choose to shop for new insurance may be paying more, as some providers may choose to increase the personal injury protection (PIP) costs. 

Additionally, the new reforms put no limitations on insurers' hiking other parts of their customers’ bills, like liability insurance, which is required by law. 

Some insurance providers, such as Farmers Insurance, claims that they will offer discounts to drivers in Michigan who opt to lower their PIP limits. 

Farmers said that their total premium would decrease by 2% average; they also said that nearly 9,000 of their policyholders would not experience any changes whatsoever in their rates if they maintain coverage as it currently is.