CLEVELAND — When Detroiters think of Cleveland, they might snicker about its disparaging old nickname, the Mistake on the Lake.
But make no mistake. Residents of Cleveland enjoy a benefit beyond the NBA Cavaliers’ recent championship that doesn’t exist in Detroit: Cheap auto insurance.
A Free Press examination found that auto insurance premiums in Cleveland are often thousands of dollars a year lower than the highest-in-the-nation rates that Detroiters pay.
- A former Cleveland City Councilman who drives a BMW and has had multiple drunken-driving convictions pays less than $100 a month.
- A new resident pays about $65 per month for a Honda Accord, just slightly more than he did in the suburbs.
- A Cleveland couple in their 30s pays about $100 each month for two vehicles.
In Detroit, a sub-$100 monthly auto insurance premium is the stuff of fantasy — even for those with perfect driving records and excellent credit. One state lawmaker with a good driving record, for example, pays more than $400 a month.
Cleveland’s low rates persist even as insurers in Ohio use the same non-driving factors when setting premiums that critics say unfairly penalize people in high-poverty cities like Detroit.
Those factors include drivers’ home ZIP codes, a version of their credit scores and whether they have four-year college degrees.
Some say this insurance industry practice is especially discriminatory to black people —tantamount to “redlining” areas where they live — and a major reason for Detroit’s sky-high rates that can exceed $3,000 a year to insure a single vehicle.
“We’re simply charged for being black in Detroit,” state Rep. Sherry Gay-Dagnogo, D-Detroit, said during debate in Lansing last fall on a proposed auto insurance overhaul that was voted down.
But insurance experts say the huge contrast between Detroit’s and Cleveland’s auto rates isn’t because racial or class discrimination by insurance companies is any worse in southeast Michigan than in northeast Ohio.
Instead, it’s another example of how Michigan’s one-of-a-kind no-fault insurance system, which mandates that all motorists buy coverage for potentially unlimited medical benefits, forces Detroiters to pay so much more than anyone else.