Will Illinois auto insurance be more affordable with driving habit-based rates?

Auto Insurance - Illinois Sign on Road

A bill introduced in the state would require insurers to use a driving record to calculate premiums.

A bill newly introduced in Illinois would change the way auto insurance companies calculate rates if it is passed in the state.  It would require insurers to use a policyholder’s individual driving records for their premiums calculations instead of looking to socioeconomic factors.

House Bill 4611 aims to reduce what it calls discrimination

House Bill 4611 was written to ban auto insurance companies from calculating an individual’s rate using criteria that the bill has described as discriminatory. These criteria include a policyholder’s sex, age, zip code, race, or credit score.

Auto Insurance - Driving Record - Illinois

For instance, teenaged male drivers in Illinois are currently paying premiums that are about 14 percent higher than their female counterparts. This is a reflection in the risk insurers have assessed in young male drivers in general.  Similarly, according to data printed by the Chicago Sun-Times, 60-year-old drivers in the state pay 12 percent less than those ten years older.

The auto insurance rates bill would change that calculation

If the bill passes, those factors will be dropped as a part of the calculation an insurer uses to determine the premiums an individual driver will pay.  Instead, it will be that individual’s own driving record that will be used to determine what they will pay.

To do this, insurers will be able to purchase a driver’s data to calculate that person’s “risk score”.  That score is what can be used to determine the individual amount the policyholder will pay in premiums.

Will this create a fairer system?

According to Alexi Giannoulias, Secretary of State and supporter of the bill, passing it will bring on fairer auto insurance rates for Illinois drivers.

“The purpose of auto insurance is to protect motorists while they drive; therefore, an individual’s driving record should serve as the primary factor analyzed when setting rates,” said Giannoulias. He underscored that “All we’re asking for is fairness,” with respect to the rates drivers are paying for their coverage. He underscored the importance of coverage for drivers, but that “if you’re poor and live in Illinois, you are paying higher insurance premiums for your vehicle.” Giannoulias called that practice “unacceptable”, and said that the purpose of the bill and his support of it is “to fight” it.

Creating a new balance

According to State Rep. Will Guzzardi (D-Chicago), the goal needs to be to “rebalance the system” so that drivers are all paying auto insurance premiums based on their driving habits and individual driving risk, and not based on their employment history, community of residence or credit score.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.