State House of Representatives Democrats revealed a plan that they hope will reduce the rates of auto policies more Michigan drivers and will make the restrictions on insurance companies in the state tighter and more stringent. On the other hand, reacting immediately on the announcement are insurance providers saying that the Democrats plans are not really that good that it will result to more expensive costs for drivers. The Michigan Insurance Coalition even called the Democratic plan as political grandstanding and a way of driving insurance industry out of Michigan.
According to reports, the legislative plan lobbied by state Democrats would mandate companies to sell low-cost auto insurance that will be tailor fit to low-income motorists who have sterling driving records. State Insurance Consumer Advocate Butch Hollowell has been known to support the planned legislation. Hollowell even accused major players in the insurance industry for their unfair pricing practices that end up in excessive profits for them to enjoy and costly expenses carried as burden motorists.
Representative Bert Johnson said that a number of families in Detroit have long been suffering the direst of circumstances because of the economic recession, and yet insurance providers still take every chance they can to bill Detroit drivers the highest rates in the state. Johnson adds that companies should be prevented from using unjust methods of computing policy prices, as it can be appalling that insurers continue to use a motorist’s credit history to justify major rate increases.
In recent years, the topic on car insurance rates has been a sore point for Michigan drivers, especially for motorists in Detroit which has been known for having the most expensive rates in the state. When ranked with other states in the United States, Michigan ranks as the state with the second-highest auto premium rates, only a few dollars away from New Jersey which still ranks as number one.
Local motorist groups remain confused as to why policy prices in the state still go up when accidents and auto thefts have continuously declined in Michigan. Local groups argue that if the drivers were able to make the state highways safe in recent years, then they should be spared from paying steeper premium prices.
Industry insiders predict that if the costs of auto insurance continue to hike in 2010, many drivers will be forced to drive illegally without insurance, which is definitely bad news for Michigan. Experts say that an increase in uninsured drivers can trigger an increase in collisions; collisions and road accidents will stain the driving records of motorists, which in turn will lead to more expensive premiums.