AAA Headquarters in Dearborn.

DEARBORN — High auto insurance prices in Dearborn are becoming an economic burden on residents and pushing some motorists to drive illegally without coverage. The loss ratio for insurance companies hikes the rates. All drivers have to suffer because of the high costs of past claims.Ali Khalifeh, an agent at Kelly Insurance for more than 30 years, said Dearborn residents have a tendency to follow through with several doctors’ visits and make the most out of their insurance claims.”People know the easiest thing to get is insurance money,” he said. “So they come up with fake claims. The doctors, chiropractors and lawyers are hungry for insurance money. And other drivers end up paying the difference. It’s a shame.”He added that fraudulent claims of back pain are common in Dearborn because they are hard to detect.”Why do all people who get in accidents in Dearborn get back pain and people in Bloomfield don’t; it doesn’t make sense,” Khalifeh said.He stressed that only few people in the community engage in such behavior, but it does affect everybody’s rates.According to the veteran agent, Dearborn drivers could pay up to 70 percent more than other motorists, based on the zip code alone.Khalifeh said some Dearbornites change their address in order to get lower rates, but insurance companies are catching up to the ploy.”You cannot say I want to put my address in this area versus where I live because they know from the driver’s license,” he said. “They can pull exactly where you live. You can change your address on the driver’s license, but they still know. You need proof that you live on the new address, like a utility bill or a checking account.”Michigan has no-fault insurance, so no matter who is responsible for the accident, insurance providers cover, at the least, healthcare bills in cases of injury. The state requires drivers to have Personal Injury Protection (PIP) auto-insurance, also known as one-way, which covers unlimited medical benefits.However, if a driver is looking to finance or lease a car, most dealers require comprehensive coverage for theft, fire and body damage.Astronomical ratesFor first-time insurance buyers especially, astronomical rates are prompting some Dearborn residents to illegally drive without coverage. Bassem (not his real name), a Dearborn resident, said it is “not worth it” for him to get auto insurance.”The cheapest quote I got was $1,500 for six months for one-way insurance,” he said. “I just don’t have that kind of money. Let the police catch me.”Bassem, 33, has a clean driving record, but has never bought insurance.An east Dearborn resident, who also wished for her name not to be published, said her full-coverage insurance rate for a 2014 Toyota Corolla would have been $900 per month.She said she was shopping for insurance before leasing the car when she found out about the “unbelievable” figure. Although she had a clean record, she was 23 and had no insurance history, which could have been one reason— along with where she lives— for the hefty rate.”The insurance agent said, ‘I can’t even tell you what the rate is,'” the Dearborn driver said. “I was shocked. There was no way I would pay $900 a month for insurance.”The motorist ended up listing herself on her cousin’s policy, whose address is in Canton. The rate dropped to $180 and later to $120 after she switched her insurer. Legislative efforts State Sen. Morris Hood III, a Democrat who represents Dearborn and a portion of Detroit, slammed the discrepancies in insurance rates between geographical areas. “If you have no tickets or accidents and you live in Dearborn, why are you paying way more than someone who lives in Royal Oak, when based on your record, you’re not a high risk customer?” he asked, rhetorically. “It boils down to where you live; and that is unfair.”Hood compared insurance companies’ rates for different zip codes to “redlining,” an illegal practice of denying services for a community within a certain area.”In Michigan, it’s mandated to have auto insurance in order to drive a vehicle,” Hood said. “But if you are mandating people to have insurance, why isn’t it affordable? We find that in a lot of cases, they don’t want to write off insurance for the inner city and surrounding areas because of the risk factor.”The state senator said the issue of insurance rates has been raised in Lansing to no avail. “We don’t want handouts. We just want fairness across the board.”Hood said a bill to regulate the difference in costs between cities would not get adequate support in the Legislature.”We need to pass laws that rectify the problem,” he said. “But if the insurance companies say we will lower your rate but raise everyone else’s, we lose support because no legislator will say, ‘okay raise the rates for my constituents.'”Given this situation, Hood said the best way to reform auto insurance is through the governor’s office.”We need to get out and vote and get folks in the governor’s mansion who will look at our plight and take care of our issues,” he said.  State Rep. George Darany (D-Dearborn) said there has been an ongoing dialogue in Lansing regarding insurance prices, including revisiting the factors that determine the price.He said he has heard concern from Dearborn motorists about insurance costs. “I remain committed to reviewing all options that may help ease financial requirements on consumers,” he told The Arab American News via email.AAA urges Lansing to actRepresentatives of AAA told The Arab American News that high loss in PIP ( Personal Injury Protection) coverage and comprehensive coverage is the leading cause for high rates in the Dearborn area. Leroy Mattic, insurance product manager at AAA, explained that three main categories determine a driver’s rate: the type of vehicle and its safety features; the location where the car is garaged, which considers the crime rate and loss risk of the area; and the driver’s characteristics, which look at the driver’s driving history, age and credit score.According to Mattic, AAA uses Census blocks, small geographical units set by the U.S. Census Bureau, to determine loss ratio by location. Dearborn falls under three census blocks, which also include parts of Detroit, Melvindale, Allen Park, River Rouge and Dearborn Heights. AAA Michigan spokeswoman Nancy Cain said the company studies past coverage expenses in a certain area to determine the current rates.She said higher insurance rates in Dearborn are a reflection of higher loss for companies in the city.”That’s just how it works,” she said. “It’s unfortunate.”However, Cain rejected Sen. Hood’s “redlining” analogy, saying the illegal practice implies refusing to provide services to a certain community. She said insurance companies do not deny customers based on location.Cain said legislators should pass laws that would ease the costs for drivers.”In Michigan we have the best coverage in the nation, but it has gotten so expensive that one in five drivers is driving uninsured because they can’t afford it,” she said.Michigan has unlimited PIP coverage. Cain said if the coverage is capped, it would lower costs for all drivers. She added that regulating medical schedules would also help. According to Cain, medical facilities charge $453 for MRIs if a person is injured at home; but they raise the price on insurance companies to $2058 for the same procedure after a car accident.Cain urged consumers to contact their state legislators and lobby for reforming insurance rates.She advised drivers to stay safe, take advantage of available discounts and pay their bills on time in order to lower their rates. Cain said the credit score is indicative of how responsible the motorist is, adding that there is a correlation between low credit scores and bad driving.”Do your best to have a clean driving record; avoid accidents; avoid getting tickets; wear your seat belts,” she said.Mattic said that parking your car in the garage also diminishes the chances of theft and getting hit by another car while parked.Bad for the economyDearborn Councilman Robert Abraham said costly insurance hurts the local economy.”When residents spend more money on insurance, they have less money to reinvest in our local businesses,” he said. “It is simple math. We want people to spend more money locally, but that can’t happen when every single homeowner is forced to pay higher-than-average insurance costs for their cars and homes.” Abraham said the city cannot do much to influence the costs directly, but it is doing everything possible to increase awareness and public safety.”We are at the mercy of our geography, which we can’t change,” the councilman said, referring to Dearborn’s proximity to Detroit, where crime rates are higher. “We don’t get to pick our neighbors or borders. Dearborn is where it is and we have to deal with the consequences in a reasonable and productive fashion. That’s why our police officers and first responders are second to none.”Detroit is also suffering from high insurance costs, which make potential residents reluctant to move into the city.Mayor Mike Duggan is working with the State Legislature to allow Detroit drivers to opt out of the unlimited PIP coverage, putting a cap on total medical benefits at $275,000. According to a report by a firm hired by the city, the plan, dubbed D-Insurance, would save drivers $600 to $2,300 annually.Cain said AAA supports Duggan’s proposal.