U Of M Study Concludes Detroit Car Insurance Is Designed To Keep Us In A Cycle Of Poverty

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The “cycle of poverty” in Detroit won’t end until car insurance rates become more affordable, a University of Michigan study concludes. 

Detroit, the nation’s most impoverished big city, has the highest auto insurance rates in the nation. 

The average annual premium is $5,414, compared to $1,427 nationally. As a result, Detroiters on average spend 18 percent of their income on auto insurance. In some Detroit zip codes, auto insurance soaks up 36 percent of drivers’ income.

Anything beyond 2 percent is “unaffordable,” according to the U.S. Treasury Department’s Federal Insurance Officers. 

It’s no wonder, then, that an estimated 60 percent of Detroiters drive without insurance. That’s compared to 13 percent nationally. About a third of Detroiters don’t even own a car. 

The University of Michigan study blames the high rates on a number of factors, most of which can be resolved with legislation on the state and federal level.  

Auto insurance companies use drivers’ credit scores in calculating rates. Drivers with poor credit scores pay more than twice for their insurance than someone with an excellent score. 

“This is a big problem for Detroit residents, who collectively have some of the lowest credit scores in the country,” the report states. “Thus, a single mother in Detroit with a perfect driving record but bad credit could be charged one of the highest auto insurance premiums of any person in the entire country.”