Duggan says auto insurance savings could run from 30 to 50 percent with new law

DETROIT (FOX 2) - There may very well be three hallmarks of "The Motor City" Coney dogs, cars and sky-high auto rates

"It's very burdensome, very difficult trying to get insurance," said Reggie Turner. "I have shopped around at many insurance companies and they come up with the same price, high prices."

Turner, a lifelong Detroiter, is hoping to score some savings July 2nd. That's when the auto insurance reform law goes into effect.  Mayor Mike Duggan outlined Thursday how Detroiters and any Michigander for that matter, can take advantage of it.

"For the first time since 1972 - two weeks from today - you can decide what's your medical coverage if you're in an accident," he said.

And that's a big deal.

"The reason our insurance is so high is because under the old no fault law we were forced to buy unlimited medical coverage with our auto insurance policies-even if Medicare or our health care from our jobs would take care of us, if we were in a car crash. 

Now on July 2nd drivers can choose to either keep their unlimited Personal Injury Protection or PIP policy, opt out of it entirely, or buy reduced medical coverage through PIP.
 
Duggan showed a scenario where one city employee could cut her auto insurance in half by opting out of PIP entirely.

"She's got to make a decision: is it worth $2,000 to me with my city of Detroit coverage instead of paying for it a second time," he said. 

But not everyone will be able to make that decision - only those with qualified medical coverage think Medicare or health insurance from your job-can opt out of pip in no-fault insurance. Those with Medicaid do not qualify.

"Let's say you can't opt out. You don't have qualified healthcare coverage or you're not all that crazy about your HMO at work," Duggan said. "I don't want to rely on my own health insurance, but I also don't want to pay unlimited PIP. You now have two more choices, you can buy $500,00 of pip and you can buy $250,000 of PIP.

This leads theoretically, to a lower insurance premium and more money in your pocket. Michiganders pay a lot more for car insurance compared to other states - and Detroiters have it the worst.

According to insure.com the average cost to insure a car in Ohio is about $1,000. In Detroit it is four times as much.

“It creates a system of haves and have nots where you can afford mobility or you can't," Duggan said.

There is a catch if you opt out, every relative living in your house would have to have health insurance for car accidents, because they might ride in your car. The best advice is meet with your insurance agent to find what is the best plan for you.