WASHINGTON (CBS DC) – A new study finds that having a better driving record could actually mean you are paying more for insurance.
The Consumer Federation of America (CFA) reports that the insurance industry uses factors such as education and occupation to rate driving risk rather than a driver’s record on the road.
To conduct the study, CFA researchers visited the websites of the five largest U.S. auto insurers – State Farm, Allstate, GEICO, Farmers and Progressive – looking for the minimum liability coverage required by that state. This was done for both women in 12 cities.
The CFA found policy prices for two hypothetical, but distinctly different customers: a high school receptionist and an executive. Both women were 30-years old, had driven for 10 years, lived on the same street in the same middle-income ZIP code.
The receptionist lives in a rental apartment and is single. The executive is a married homeowner with a master’s degree who never had lapsing coverage, but had an at-fault accident with $800 of damage within three years.
The study found that Two-thirds of the 60 quotes were lower for the executive (who had an accident) than for the receptionist (who had none), often by 25 percent or more.
Stephen Brobeck, CFA’s executive director, told today that this is a “discriminatory practice” that raises the rates for low-and moderate-income drivers.
A 2012 CFA study found that two-thirds of American believed consideration of these factors, rather than driving history, was an unfair practice.
But the insurance industry rejected the discrimination claims.
“The policies we offer are fair in every way,” said Michael Barry, vice president of media relations at the Insurance Information Institute.