LANSING – A bill that would prohibit automotive insurance companies from grouping customers by territory was read before the House Insurance Committee today.
House Bill 4074, introduced by Representative Bert Johnson, would alleviate the pain suffered by Detroiters that experience the state's highest automobile insurance rates based solely on their place of residence.
"The process of redlining is unfair to Detroiters and is an obstacle to the city's recovery," said Rep. Johnson. "It is a very tough sell to convince people to relocate to Detroit when they're going to be penalized monetarily for that decision every time they make an insurance payment."
Redlining is the process by which automotive companies group customers together and charge them premium rates based upon the risk involved in the location where the vehicle is garaged.
Detroit has Michigan's highest auto insurance rates, and its surrounding suburbs suffer from proximity to it. For instance, residents of Kalamazoo, a western Michigan city, pay automobile insurance rates that are 25 percent lower than those paid by residents of Troy, a considerably wealthier suburb of Oakland County.
Michigan House Democrats expect to explore other legislative avenues that would lessen the insurance burden on Detroit residents. Prohibiting insurance companies from establishing rates based on an applicant's race and requiring insurance companies to provide thorough reports indicating precisely which applicants are rejected for coverage are a few of the measure being considered for introduction.
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