Auto insurance companies offer some motorists variable and high rates for low coverage

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Good drivers from areas of moderate incomes are seeing increased costs.

According to data from the Consumer Federation of America (CFA), which just released a report on its research, the majority of good drivers – that is, those who have no moving violations or accidents on their records – who reside in the moderate income areas of 15 cities included in the study, are receiving quotes for high rates by the leading insurers for auto insurance for the lowest legal liability levels for their states.

Among the rate quotes, 56 percent for typical drivers with a moderate income were over $1000 per year.

Equally, 32 percent of the quotes for those individuals were greater than $1500. This study used the official websites for the leading four auto insurance companies in the country: Allstate, GEICO, State Farm, and Progressive. It also indicated that the quotes for the rates are quite variable. In fact, the same consumer profile differed significantly from one company to the next. For instance, the quotes received by the same woman’s profile in the same city had a range of $762 to $3390.

The executive director of the CFA, Stephen Brobeck, stated that “It is difficult to understand how insurers can justify charging more than $1000 a year for minimum insurance coverage to drivers who have perfect driving records for many years.” He added that he finds it challenging to understand why someone with precisely the same details would receive such a wide range of quotes from the various leading auto insurance companies.

Brobeck also asked that if “Insurers say rates reflect risk and cost, but if this in fact is the case, why do their assessments of these factors differ so radically?”

The director of insurance for the CFA, J. Robert Hunter, who is also a former Insurance Commissioner in Texas, made a call to the other commissioners across the country to perform a probe into this worrisome issue. He stated that as all of the states, aside from New Hampshire, legally require motorists to have coverage, then these officials are responsible for making sure that the rates these drivers are being charged for auto insurance are affordable and fair.


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