A national consumer group says driving while poor can be more expensive for your car insurance bill than driving while intoxicated, and it calls out Progressive and Geico.
“It is profoundly unfair that a driver with a moderate income and a perfect driving record is often charged more for auto insurance than higher-income drivers with DUIs, accidents and speeding tickets,” said J. Robert Hunter, the Consumer Federation of America’s director of insurance and former Texas Insurance Commissioner. “As long as state governments require drivers to buy insurance, they should require insurance companies to price their product based on how we drive, not who we are.”
Progressive and Geico spokesmen declined comment but referred questions to industry groups.
“Insurance companies don’t look at your income,” said James Lynch, chief actuary for the industry-funded Insurance Information Institute. “They don’t care about your income. They care about how much risk you present, and that is what they base their price on.”
The study released Monday did not include a Florida example, but found in 10 U.S. cities that a moderate-income driver with a perfect driving record was charged more for basic liability insurance than a high-income driver with a recent DUI in 70 percent of cases involving the top five auto insurers.
California has the most aggressive rules requiring insurers to focus on driving records as opposed to economic factors, officials noted. A spokeswoman for Florida’s Office of Insurance Regulation said she was checking on whether her agency would offer comment.
CFA said it tested prices for the five largest car insurers — Allstate, Farmers, GEICO, Progressive, and State Farm — in Atlanta, Baltimore, Chicago, Jacksonville, Jersey City, Los Angeles, Kansas City, Minneapolis, Oklahoma City, and New York City. In each place, CFA said it tested two female drivers, both 30 and living at the same address, driving a 2006 Toyota Camry 10,000 miles a year.
The consumer group said the example drivers differed only in personal characteristics that are correlated with income. The lower-income driver, for instance, was an unmarried renter who had been uninsured for six months while the wealthier example had continuous coverage.
The consumer group says insurers routinely deny using factors such as income and economic status to set rates, but maintains this study highlights just far much some companies are willing to go to attract customers with higher incomes, in part to sell them other kinds of policies or products.
“Progressive and GEICO consistently charge upper-income bad drivers less than moderate-income good drivers,” CFA said. “The premium for a basic auto insurance policy from these two companies cost more for a good driver with a moderate-income than for a higher-income driver with a recent accident and/or violation on her record 78 percent of the time. State Farm was more likely than any other company to charge the good driver a lower rate than a driver with accidents or violations on her record, irrespective of social status.”
Update: A statement from the state’s Office of Insurance Regulation said, “The Office is in the process of reviewing the information contained in this study and will carefully evaluate it to determine if there are any issues or concerns specific to Florida’s insurance consumers that can be addressed.”
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