Accident on Paul and more

In today's edition of the Warrendale neighborhood news roundup, there was a traffic accident on Paul, help for Detroiters facing foreclosure, and a discussion about Michigan's no-fault auto insurance law.

Traffic accident at Paul and the Southfield Fwy. | Photo by Frank Nemecek

Accident on Paul
There was a rather nasty traffic accident yesterday evening at approximately 6 p.m., which involved two minivans. One of the vehicles struck and knocked down a pole on the south side of Paul.

The Detroit Police and Fire Departments reponded quickly. None of the injuries were life-threatening.

Home | Stock photo from Pexels

Foreclosure prevention workshop this Saturday
The United Community Housing Coalition along with the City of Detroit Department of Neighborhoods will host a foreclosure prevention workshop this Saturday. This is a great chance for homeowners and tenants to get the help they need to keep their homes.

The workshop will start at 10 a.m. and run until 1 p.m. this Saturday, February 29. It will happen in the Adam Butzel Recreation Center (10500 Lyndon), which is in Detroit and approximately four miles northeast of the Warrendale neighborhood.

Residents are asked to bring a copy of their deed, land contract, or lease along with:

• Drivers license or valid photo identification;
• Recent DTE bill, phone bill, or other mail with your name on it; and
• All correspondence received from Wayne County.

There's no charge to attend this workshop.

Corvette on the highway | Stock photo by Autos8/Pixabay

Whitsett to discuss auto insurance
State Representative Karen Whitsett, who represents the Warrendale and surrounding neighborhoods, will lead a discussion of Michigan's no-fault auto insurance laws and regulations. This will presumably include an update on efforts to make auto insurance more affordable for Detroiters.

This discussion will happen at the Greater Southern Baptist Church (8000 Fullerton), which is in Detroit and approximately three miles northeast of Warrendale. This will be on Tuesday, March 3 at 6 p.m.

5 ways to stretch your tax refund

Both the Michigan Department of Treasury and the Internal Revenue Service are busy these days processing tax returns and issuing refunds to millions of Americans. The average federal refund last year was $2,869 according to an analysis of data from the IRS.

It’s a sad reality that bars, restaurants, and casinos all get busier when tax refunds arrive. For those who want to use that refund to make a long term difference in your family’s situation, I offer five ways in which you can stretch your tax refund.

Making a payment | Stock photo by StockSnap/Pixabay

Switch to annual payments
Your auto, home, and life insurance premiums. Subscriptions to one streaming service or another. These are just some of the bills that most Americans have that offer a discount if you can pay them on an annual or semi-annual basis instead of paying them monthly. You can save hundreds of dollars by switching to an annual basis and this is one discount that companies are thrilled to give you.

For most Americans most of the year, they simply don’t have enough cash on hand to take advantage of these offers and realize the savings. Your tax refund, however, provides an opportunity to break out of this cycle and start saving money.

I recommend starting with your insurance premiums. Talk with your insurance agent to see what kind of a discount you can get by switching to an annual or semi-annual payment.

Paying | Stock photo by Quinn Kampschrorer/Pixabay

Pay down debt
This one is kind of a no-brainer. The average American has four credit cards and carries a balance of $8,640. If you only make the minimum payments, it will take decades for you to pay that off. Paying down your debt means huge savings in interest charges.This is especially true with high-interest credit cards.

Your tax refund provides an opportunity to pay down some debt. This can either be by taking money directly from your refund check and paying it down or by taking some of the money that you saved from switching to annual payments and adding a few extra bucks to each month’s payment.

For Detroiters looking to get a handle on their debts, help is available through the Financial Empowerment Center. I wrote about this program last November and details about it are available here.

Boost savings | Stock photo by Manuel Alejandro Leon/Pixabay

Boost savings
If you don’t have a savings account, now is the time to start one. If you don’t have at least six months worth of basic living expenses in your savings account, now is the time to make a deposit.

Just like when it came to paying down debt, you can boost your savings directly from your income tax refund or by using the money that you saved from switching to annual payments and/or paying down debts.

Also, remember that you have until April 15, 2020 to make a 2019 contribution to your IRA.

Saving energy | Stock photo by PIRO4D/Pixabay

Energy saving improvements to your home
For most Americans, your home is your single biggest investment by far and utilities are one of the biggest expenses for that investment. By making a few improvements, you not only lower your energy costs but also boost the resale value of your home.

Plus, making energy savings improvements to your home today can also mean a bigger tax refund next year in addition to lower energy bills.

Having fun | Stock photo by Free Photos/Pixabay

Have a little fun
While I believe that the bulk of your tax refund should go towards improving your family’s long term financial strength, there’s nothing wrong with having a little bit of fun along the way. Dinner and a movie with your spouse is a classic option.

For those who want something a little different, websites like Groupon offer deals on all kinds of fun things to do.

These tips are brought to you by the Warrendale Detroit Blog as part of our Tip of the Week series. Please check back next week for more advice on your home, money, and life. The rest of the tips are avilable here.

Please feel free to follow the author Frank Nemecek on Twitter and Instagram as @fnemecek for more great content.

Insurance reform defeated. What next?

Interior of the Michigan Capitol Building - Photo by Frank Nemecek

The State House of Representatives shot down a bill yesterday that would have lowered auto insurance rates throughout Michigan and in Detroit in particular. The reform bill was defeated by a vote of 45-63, in a sharp rebuke to Mayor Mike Duggan in lobbied strongly for it.

I have argued for years, on this blog and elsewhere, that finding a way to lower auto insurance rates in Detroit was crucial to this city's recovery. We simply cannot continue with so many residents being forced to drive illegally because they cannot afford to spend thousands of dollars for auto insurance nor can we continue to operate where a large portion of our residents live elsewhere on paper in order to get a somewhat normal rate on their insurance.

I give Mayor Duggan an enormous amount of credit for trying repeatedly to get some type of relief from the Michigan Legislature. Others have spent decades trying to get such relief and our mayor has gotten closer to success than any of them.

Still, after suffering under oppressive insurance rates for decades, I believe that it is time to try something different - even if that something might sound unorthodox at first.

It has become apparent that after decades of trying to reform insurance rates, Detroiters must reluctantly accept the fact that - in all likelihood - the Michigan Legislature will never allow auto insurance reform to happen. I could spend hours going over the various reasons why one group or another is steadfastly opposed to change. The bottom line, though, is that Detroiters need reform and Lansing is not going to allow that to happen.

Our only remaining option, therefore, is to bring about reform in a way that Lansing cannot easily interfere with. It is time, I believe, for the City of Detroit to set up its own insurance company - an insurance company that would be set up to deliver more affordable coverage to Detroiters.

It will not be easy or cheap for the City of Detroit to set up its own insurance company. There a multitude of licensing requirements to starting such a company, not the least of which is having an initial pool of cash on hand to pay any claims that might come about during the early days of the company's operations.

I will not sugar the size of those upfront costs. It will likely cost millions of dollars upfront to get such a new insurance company operating for Detroiters.

Instead, I will simply point out the following:

• It took $416 million in 2016 dollars to build Comerica Park with much of that cost being born by Detroit's taxpayers;
• Ford Field had a construction price tag of $666 million in 2016 dollars with Detroit's taxpayers paying much of that cost;
• Taxpayers also spent $279 million to renovate Cobo Center in 2010; and
• More recently, the Little Caesars Arena was built at a cost of $826.9 million with Detroit's taxpayers covering a healthy portion of that cost.

While I do not mean to disparage the value of these project, I do mean to point out that Detroiters found a way to come with approximately $2.2 billion to cover their costs.

$2.2 billion.

Let there be no mistake, the City of Detroit could establish its own insurance company - one that would provide quality auto insurance to Detroiters at much more reasonable rates than we currently see - for far, far less than $2.2 billion.

Detroiters found a way to get it done for each of these projects, It's time to do it again and establish our own insurance company.

Study shows minorities pay higher insurance premiums

Lloyd's of London - Photo by Charis Tsevis

A recent study has shown that consumers in predominantly minority neighborhoods pay as much as 30% more for auto insurance as do others in similar accident costs. This study was published by ProPublica, an independent, investigative journalism outlet that has won multiple Pulitzer Prizes.

In conducting their research, ProPublcia looked at premium and claim payouts in California, Illinois, Texas, and Missouri. They identified insurance claims in different areas.

Once they identified predominately white neighborhoods that had ones that had the same level of insurance claims as predominately black or Latino neighborhoods, they compared the premiums that consumers in those neighborhoods were charged. In each instance, the predominately white neighborhoods paid less for auto insurance than their minority counterparts with the same claims history.

The full text of this report on the auto insurance industry is available here. The methodology and source of information behind this study are explained in more detail here.

The Insurance Information Institue, a trade group for the insurance industry, disputes the findings from ProPublica in an op-ed available here. The insurance industry argues that ProPublica did not use the correct information in their analysis. This is true.

Of course, it's also true that the data that the insurance industry says that should be used for an analysis like this is not publicly available. ProPublica used the closest proximity to the ideal information from that data is available.

This brings me to two important conclusions.

1. More information ought to be available publicly. It's impossible for any discussion or debate to happen when only one party in the conversation has reliable data. As it currently is, with only the insurance industry have detailed data, it creates an environment that is ripe for abuse.
2. There needs to be more review done on an independent basis. The fact that a difference in prices paid among predominately white and predominately minority neighborhoods is this consistent across states and insurance carriers clearly demonstrates in my mind that something is amiss and someone needs to look into independently.

People have argued that auto insurance premiums had a racial component to them for years. This adds at least a little bit of additional credibility to those arguments.

Detroiters vs wolves: what matters more in Lansing

Gray wolf - Photo by Isster17/Wikicommons

It was this past Friday that Gov. Rick Snyder signed legislation that would authorize wolf hunting in Michigan. This, by the way, was the fourth time in four years that there has been one legislative attempt or another to allow wolf hunting in this state.

I repeat, wolf hunting has resulted in four different pieces of legislation reaching the governor's desk in the past four years.

Meanwhile, legislation authorizing the D-Insurance program has been languishing in the Michigan Legislature for almost two years.

Hunting wolves has resulted in four different bills moving through the Michigan Legislature. However, when it comes to helping inner-city residents cope with out-of-control auto insurance costs, the Michigan Legislature can't be bothered to do anything.

This is frustrating, to say the least.

Based on all of this, I believe that it well past time for the City of Detroit to reexamine an issue that has been discussed for years now - that is, the City of Detroit to start its own insurance company.

Lansing isn't going to help Detroiters get affordable auto insurance. They are too busy worrying about whether or not people can hunt wolves in northern Michigan.

The insurance companies aren't going to help Detroiters get affordable auto insurance. Quite frankly, I don't think they even want to insurance anyone who lives in the inner city.

This is an issue where Detroiters need to help ourselves. And that means starting our own insurance company.

Detroit examines creating its own auto insurance for residents

Auto insurance has long been the bane of many Detroiters. The rates that city residents pay is dramatically higher than those paid by our suburban neighbors and this has been one of the many impediments to bother attracting new residents as well as retaining current ones. All of this may change, though, thanks to a plan approved by the City Council today.

The City of Detroit has hired Pinnacle Actuarial Services of Bloomington, Illinois to examine the feasibility of creating a city-owned insurance program. This program, tentatively called D Insurance, would provide city residents with auto insurance rate that much cheaper than what is currently available.

This idea has been proposed several times over the years, most notably by former City Council Member Kwame Kenyatta. However, prior to today, no action has ever been taken on making it a reality.

I believe this is an important first step in either creating such a program or in scaring the crap out insurance companies so that they make changes to their rates. I commend Mayor Mike Duggan as well as Council Member Gabe Leland who represents the Warrendale and its surrounding neighborhoods on the Detroit City Council and each of the other council members for taking this important first step.