Safe drivers may be facing significantly higher auto insurance rates
There are many factors that go into determine auto insurance rates. Driving history, place of residence, credit score, and age can all be used to determine the price of a policy for a particular individual. Those with good driving records, typically known as safe drivers, are often considered to be charged the absolute lowest auto insurance rates possible. This is not the case, according to the Consumer Federation of America. The consumer advocacy group has released a new study that suggests auto insurance rates are not actually lower for so called safe drivers.
A good record may not mean lower premiums
While many drivers with good records do enjoy lower rates for their coverage, some that fall into a particular demographic actually pay much higher auto insurance rates. The Consumer Federation of America created two hypothetical motorists in 12 cities throughout the country, representing a total of 60 cases that the organization studied. The study found that more than three-fifths of the cases saw motorists with accident-free records being charged more than 25% for their coverage than those with poor driving records.
Study shows demographic information heavily influences cost of coverage
The fictional motorists created for the study were both 30-year-old women with 10 years worth of driving experience each. Both were in the same middle-income bracket, but had minor differences that dictated the cost of their coverage. The first motorist had no accidents of their record, but had only a high school education, worked as a receptionist, and rented an apartment. The other motorist had an at-fault accident on their record, but held a Masters degree and owned a home. The former was regularly charged auto insurance rates of more than $1,000 in most of the cases, while the later saw rates as high as $850.
Consumer group pushes for auto insurance reform
Insurers suggest that education and income levels are used as actuarial factors when pricing auto insurance coverage. The Consumer Federation of America argues that the use of this demographic information is unjust and is pushing for insurance regulators throughout the country to ban the use of such information. In many states, insurers are already barred from using gender to determine auto insurance rates.