Detroit To Be A Testbed

By Author: Norris Rios
Total Articles: 572
Comment this article

So here's a question for you. If you live in a big city like Detroit, do you feel pressured to move out if the cost of insuring your vehicle is too high? State Senator Virgil Smith, whose Democrat credentials are pure, suggests Detroiters face tough decisions when the premium rates drop as they move from the inner city ZIP codes, to the suburbs to the smaller towns just a short distance away. The difference can be two or three times the rate. So how do citizens decide? Well, judging by the statistics, some 17% decide to drive without insurance. Yes, this breaks the law but, when the cost of complying with the law is unreasonably high and it's not economic to sell a home at the bottom of the market to move outside the city, what's a driver to do?

So the good Senator is proposing a bill to change the law. It all stems from the no-fault system used by Michigan. This is one of these great theories that can work well when the culture is supportive, but gets expensive when the culture is more selfish. In foreign countries where there's a socialist approach to life, people support a system in which they insure themselves against ...
... loss and injury. Rather than fight each other in courts, arguing over who was at fault, everyone claims on their own policies and gets on with life. In the US, the number of no-fault states is falling. The main reason is cost. Michigan mandates its drivers to carry an unlimited amount of medical cover. With everything costing more from the humble aspirin to the cost of major surgery and rehabilitation to mend broken bodies, the premium rates have spiraled out of control.

Virgil Smith is proposing to introduce a stripped-down policy for Detroiters who earn less than $30,000 a year, drive a low-cost vehicle and have never had a serious accident. He estimates that eligible drivers who buy this basic cover will cut their auto insurance rates by half. The problem, however, is that capping medical claims, say to $75,000, may work very unfairly. Whatever limit is set, treatment bills could quickly use up the amount. What then happens to the victim? In a no-fault state, the "victim" is not supposed to sue the driver "at fault" to recover additional costs. Nevertheless, this does seem a good first step to reform. Indeed, anything encouraging low-paid drivers to buy insurance improves the situation for everyone. As it stands, law-abiding motorists pay more for their cover. If more drivers pay into the no-fault fund, there's more money to pay the medical expenses. Over time, this drives down the premium rates for those in the big cities like Detroit - the most expensive city in the US for vehicle insurance. It also forces an increase in the rates for those who live in smaller cities, but that's why this is to be debated by lawmakers representing the whole state. If the politicians can forget their party ideology for a short time and reform the law for the benefit of all, we could see this test program rolled out across the state and cheap auto insurance for most drivers below the poverty line.