Auto insurance fairness questioned by Consumer Federation of America
The CFA performed research on premiums calculations which revealed unexpected results.
The Consumer Federation of America (CFA) has used the profiles of two hypothetical drivers in order to receive quotes for auto insurance coverage from a number of different insurers, only to discover that the prices they were issued were not at all what they had expected.
The two profiles involved female drivers who were 30 years old and who had the same road experience.
These two profiles also lived within the same ZIP code and were seeking to receive the same minimum level of auto insurance coverage. However, they differed in certain ways, too. One woman was single, was renting her home, and had not been covered for 45 days. She had never had a ticket and had never been involved in an accident. The second profile was married, had a graduate degree and a high salary, and was a homeowner. However, that second profile had been at fault in a collision within the last three years, which caused damage worth $800.
Though it would be expected that the auto insurance would be cheaper for the first woman, that was not the case.
In fact, in two thirds of all of the cases studied, totaling 60, the large auto insurance companies consistently gave higher premiums quotes to drivers who were safe than for those who had been responsible for a crash. In over three out of every five cases, the higher premiums for the safe drivers were at least 25 percent higher than those quoted for individuals who were unsafe.
According to the CFA, in the report that it produced based on their findings in the study, the fact that safer drivers are being required to pay more for their car coverage is a reflection of “insurer use of rating factors such as education and occupation that, in a 2012 nationwide survey, over two-thirds of Americans said were unfair.”
Equally, the report pointed out that not all of the auto insurance companies followed this same trend. In some cases, those who were paid less but who were not involved in any accidents did receive a cheaper quote.