There’s no question that car insurance is way, way, WAY too high for drivers in Metro Detroit. But there’s plenty of disagreement over how to solve the problem. Mayor Mike Duggan is now barreling back into the debate like the proverbial bull in the china shop, with a proposal that he says can fix Detroit auto insurance. He filed a landmark federal suit last week to challenge the entire insurance system after his past reform attempt failed. Could it work? It just might, says one legal expert, but like most things in Detroit, it’s not that simple.

AUTO INSURANCE CRASH COURSE

About a dozen states have no-fault auto insurance, meaning your insurer covers your costs no matter who is at fault in an accident. What sets Michigan apart — and makes its premiums the highest in the country — is the limitless personal injury protection benefits, meaning there’s no cap on medical costs. When you’re in a catastrophic accident, advocates say, PIP protects you from the financial ruin that can come from extensive hospital bills. Critics argue that we have a broken system where health care providers take advantage to charge exorbitant rates, saddling drivers with high costs when they should have the choice to pay less for less coverage. You can bet that insurance companies are in favor of changes that mean they’d have to pay less, too.

NO-FAULT INSURANCE BY THE NUMBERS

$6,197: The average cost of car insurance in Detroit, and the highest in the country. Via Duggan’s lawsuit.

$1,674: The average cost of car insurance in Cleveland, which has a tort system instead of no fault. (Duggan’s lawsuit)

23,087: Number of tickets issued last year by Detroit police to motorists for driving without auto insurance. (Duggan’s lawsuit)

20.3 percent: Portion of drivers statewide who are uninsured, the fourth highest in the country. Some estimates put Detroit’s rate around 50 percent. (Insurance Research Council)

44 percent: Portion of Detroit premium costs that go to personal injury protection. (Free Press)

MAYOR DUGGAN DIDN’T COME TO PLAY 

Duggan’s complaint — filed in federal court Thursday — goes after state official Patrick McPharlin, director of the Michigan Department of Insurance and Financial Services, and makes a bold claim: auto insurance rates are so high, and so unfair, that they’re unconstitutional.

The suit alleges that the current system is unconstitutional because of a previous ruling that required the state to ensure “that coverage is available at fair and equitable rates” for everyone.

It calls for a judge to require the Legislature to repair the insurance system within six months. And if they don’t, the no fault would be dead and the state would go back to the tort system, where the party at fault pays. (Consumer advocates have plenty of concerns about the tort system too.)

The lawsuit takes aim at the medical industry and health care providers for charging “exorbitant fees for medical procedures and services normally priced at a fraction of No-Fault rates.” It also blames attorneys who pursue excessive payouts for minor accidents.

A Free Press investigation last year detailed how health care providersjack up rates for auto-related medical bills, like charging five times as much for MRIs.

Duggan previously pitched a reform proposal that would allow some drivers to elect to have less personal injury coverage for lower prices (though the cap would still be higher than in most states). Despite aggressive lobbying, the state Legislature rejected the plan, and some Detroit lawmakers derided it as second-class insurance for low-income residents.

Not everyone likes the lawsuit approach either, even among people sounding the alarm on Detroit’s high insurance rates. State Rep.Sherry Gay-Dagnogo told Crain’s that Duggan is trying to “circumvent” the Legislature.

“If nothing else, he’s like a pit bull — and you can quote me on that,” she told the news outlet.

CAN DUGGAN MAKE THE CASE?

Duggan’s lawsuit has some strong strategy behind it — he dropped it like a ton of bricks just as election season ramps up, ensuring that insurance reform will remain a critical campaign issue. He’s going through the courts instead of returning to lawmakers, who are wary of reform on both sides of the aisle. And while no one’s tried anything like it, the legal reasoning is sound, said Steven Gursten, an auto accident attorney who often represents Detroiters. Gursten told Detour the no fault law was ripe for a challenge, and it seemed like someone in Duggan’s office wised up.

“You ask any Michigan lawyer who does no-fault, up until Thursday they would have told you they thought the court gave no-fault the green light,” Gursten said. “They were wrong.”

While this lawsuit could end up resulting in lower insurance premiums, there could be better ways to solve the problem — ones that hits insurance companies’ balance sheets without reducing medical coverage for accident victims.

GETTING TO THE ROOT OF THE PROBLEM 

Gursten said there are some obvious things Michigan could do, proven effective in other states, that would result in major savings for drivers — like introducing common sense regulations limiting insurance companies’ profit margins. There could also be more oversight to catch fraud and limits to how much health providers can charge for certain services.

But the thing missing from Duggan’s lawsuit that Gursten says could make Detroiters’ insurance premiums plummet overnight? Insurance companies are allowed to use a driver’s zip code and credit score to determine her rate —  a version of redlining that’s alive and well, 50 years after the Civil Rights Act.

“Michigan allows, basically, legalized discrimination,” Gursten said. “A driver with the exact same driving history can be charged more just because they’re black or brown and live in a different zip code. You can be charged $5,000 more a year, and that’s insane, and it’s especially hurting people in Detroit.”

In fact, rural insurance costs in Michigan are more reasonable and pretty comparable to national rates.

TOO HOT TO TOUCH

The redlining issue is part of why some politicians on the left, including Gay-Dagnogo, opposed legislation that would have given their constituents lower rates.. So why doesn’t Duggan address it? He could have asked the court to look at the problem, but his lawsuit only makes a brief allusion to the varying costs by zip codes.

Instead, he keeps the legislation palatable to insurance companies, putting no blame on them for profiting off of unfairly higher rates for some residents. After all, insurance companies are bankrolling legislators who could make reform happen — better to stay on their good side, it seems.

To Gursten, Duggan’s avoidance of the redlining issue looks like “a little bit of political cowardice, a little bit of expediency on the Mayor’s part.”

“He wants to get something done … and therefore he’s willing to look the other way and then allow constituents to continue to get hammered.”

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