Auto insurers charge (some) safe drivers higher rates

$1,394
$760
State Farm
$1,486
To conduct the survey, CFA used the websites for five major insurers -- Geico (BRKA), Progressive
(PGR), State Farm, Allstate (ALL) and Farmers -- to solicit rates for two hypothetical customers in 12
cities, generating 60 sets of rate quotes.
Los Angeles
$1,344
Industry officials countered that insurance is widely available, and drivers are always able to shop
around for the best price.
Up to a third of low-income drivers do not have insurance even though it is required by law in 49
states, according to CFA studies.
"Is there any question why so many of them drive uninsured when what is being asked for auto
insurance is so much of their income?" said Robert Hunter, CFA's director of insurance.
$770
$2,074
Farmers
GEICO
$678
Progressive
$832
$1,622
$812
$1,334
Allstate
$790
NEW YORK (CNNMoney)
$1,210
$546
State Farm
$1,274
Farmers
$1,248
Progressive
$678
A sampling from the CFA report
State Farm
In the most extreme example, Allstate in Baltimore quoted the receptionist an annual premium of
$3,292, compared to $1,248 for the executive -- a difference of 164%. Of the five companies
surveyed, only State Farm consistently quoted lower rates for the receptionist -- the safer driver.
$942
Progressive
Allstate
$1,218
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First Published: January 28, 2013: 4:34 PM ET
Washington D.C.
$1,224
$888
Geico, State Farm, Allstate and Farmers all declined to comment. Progressive noted it has a
voluntary program that installs a device on a customer's vehicle to track actual driving behavior, and
provide rates based on that information.
Allstate
$1,126
$554
$578
For each company and city, CFA entered information for two 30-year-old women who drove the same
car, had the same annual mileage and were both seeking minimum liability insurance as required by
state law. In each city, the women lived on the same street in a zip code with a median income of
about $50,000. No credit score was entered.
Insurers say that they use a wide variety of factors to determine the likelihood a customer will be in
an accident, in accordance with state regulations.
$1,090
Insurers are barred from basing rates on race or income, but the CFA says that their rate-setting
practices tend to result in higher rates for low and moderate-income drivers.
"If [State Farm] can be a successful company without using highly discriminatory factors, other
large companies should be able to do so as well," Brobeck said.
Farmers
GEICO
$624
"The use of factors such as credit-based insurance scoring, location of the vehicle, driver experience,
traffic citations, continuity of coverage and education helps insurers to more accurately price risk,"
Willem O. Rijksen, vice president of public affairs for the American Insurance Association, said in a
statement.
Auto insurance quotes by city
In a case study of five major insurers in 12 cities, the Consumer Federation of America found that
major insurers charged a safer driver with less education and a lower-paying job higher premiums
two-thirds of the time. In a majority of those cases, the premiums were at least 25% higher. In some
cases, the rates were more than double what was quoted for a driver who had recently had an
accident but had a higher-paying job.
$950
$1,386
GEICO
Atlanta
That's because most of the insurers surveyed put more weight on income-related factors, like
education or occupation, than driving-related factors including miles on the road and driving history,
said CFA Executive Director Stephen Brobeck.
When
setting rates, insurers often put more weight on income-related factors, like education or
occupation, than factors like driving history, according to a consumer watchdog report.
$694
The difference: One woman was a high-school educated single receptionist who rented her home and
had been without insurance coverage for 45 days. The other was a married executive with a masters
degree who owned her own home and had no lapse in coverage. The receptionist had a perfect 10-
year driving record, while the executive had recently caused a car accident.
Source: Consumer Federation of America
$782
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