Asserting that Michigan’s no fault auto insurance law is unfair to the poor, Detroit Mayor Mike Duggan filed a lawsuit in U.S. District Court, seeking to have the 45-year-old law declared unconstitutional.
The suit names Department of Insurance and Financial Services Director Patrick McPharlin as defendant.
Duggan is joined in the suit by eight other plaintiffs of various ages and cities of residence in Michigan, each of whom struggle with oppressively high insurance rates, according to the statement released by the mayor’s office.
In the suit, the plaintiffs contend that the no fault insurance system discriminates against people of lower income. Under Michigan law, drivers are required to have auto insurance. The lawsuit asserts that countless Michigan residents cannot afford to pay rates that are often more than twice the rates charged in other states.
“This law is causing thousands of people across Michigan to break the law by driving without insurance because they simply can no longer afford it,” said Mayor Mike Duggan said in the statement. “Because the Legislature has not shown the leadership to address the issue, we are asking the court to provide residents the relief they need from these unjustifiably high insurance rates.”
Duggan said that because of the abuses of the insurance system by certain hospitals and trial lawyers, no fault is no longer affordable to hundreds of thousands of Michigan residents and therefore must be fixed or declared unconstitutional.
The suit asks the court to require the governor and legislature to fix Michigan’s broken auto insurance system within six months. If no fault is not fixed in a way that guarantees affordability, the suit requests that the court order Michigan to go back to the “tort” system that was in place before no fault was established in 1973.
Duggan is joined in the suit by plaintiffs Ian Davis, Carrol Lockett, Stephanie Huby, Gladys “Peggy” Noble, Jacintha Pittman, Haley Roell, Joseph Vaughn and Clayton Wortmann. The plaintiffs say they pay excessive rates for auto insurance.
According to the statement released by the mayor’s office, Michigan’s average auto insurance premium of $3,059 is more than double the average premium in Michigan’s neighboring states — Ohio ($1,236), Illinois ($1,158) and Indiana ($1,365); the national average cost for auto insurance is $1,512.
Detroit drivers pay an average of $6,197 for auto insurance coverage, four times the national average. Detroit has the highest auto insurance rates of any city in the nation.
The Department of Insurance and Financial Services has not yet responded to Insurance Journal’s request for comment on the lawsuit.
Source: Detroit Mayor’s Office
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