New report shows Michigan still has highest car rates in US, race a factor

Refunds of $400 per vehicle will be issued

Michigan drivers will have some money coming back to them from their auto insurance next sping. Michigan Gov. Gretchen Whitmer confirmed that refunds of $400 per vehicle are on the way.

DETROIT – Michigan drivers will have some money coming back to them from their auto insurance spring 2022.

Gov. Gretchen Whitmer confirmed that refunds of $400 per vehicle will be issued. The money comes from a surplus received by the Michigan Catastrophic Claims Association. Refunds should start to arrive after March 9.

The group said about $3 billion can be returned to drivers, while still providing care for accident survivors.

Read: Whitmer: Michigan drivers will get $400 refund checks in 2022

While that’s welcome news, auto insurance in Michigan remains the most expensive in the nation and it can cost more depending on race.

In 2019, Michigan had the highest insurance rates in the country. Detroit had the highest in the state. A new University of Michigan policy brief shows while rates are dropping, those rates are still the highest in the U.S.

Patrick Cooney, assistant director for poverty impact at University of Michigan’s Poverty Solutions, dug into the issue of insurance rates in Michigan in 2019.

“The things that we ended up recommending in our 2019 brief, a lot of that ended up being part of the reform package that was passed by Governor Whitmer and the state legislature,” Cooney said.

Roughly two years later, Poverty Solutions checked in on the 2020 numbers and found rates for Michiganders and Detroit residents dropped 18%. It’s the largest annual decrease for any state in the country.

With the state still having the most expensive rates, Cooney said it’s what they didn’t find that is the most alarming.

“What you don’t see is a narrowing of the gap in the zip codes where there’s a high concentration of Black drivers and where there’s a low concentration,” Cooney said.

Then they took a closer look.

“We saw that the sort of racial makeup of zip code is more predictive of (auto insurance) rates than almost any other factor,” Cooney said. “So a lot of the things that the state legislature tried to do to reduce some of the discriminatory impacts of auto insurance pricing that did not sort of have the impact that some of the some of the other measures did that dropped overall rates.”

Now, the question is what’s next.

“Our data that we use for our brief relies on a insurance kind of quote aggregator that generates millions of quotes across the country. So this gives us some idea, we don’t have a firm idea of how this is impacting drivers on the on the ground, so more more needs to be understood there,” Cooney said.

He said California was able to reduce the racial gap in auto insurance with mandating companies to use driving-related factors to create an insurance score, not factors like zip codes or credit scores.

Cooney mentioned there are opportunities for rates to drop in the future. There are certain aspects of the reform law that just kicked in earlier this year and possibilities of more insurance companies coming to the Michigan market.

Read: More auto insurance coverage

About the Author:

Megan Woods is thrilled to be back home and reporting at Local 4. She joined the team in September 2021. Before returning to Michigan, Megan reported at stations across the country including Northern Michigan, Southwest Louisiana and a sister station in Southwest Virginia.