Research recently released by the Consumer Federation of America (CFA) reveals that most good drivers – those with no accidents or moving violations – who live in moderate-income areas in 15 cities are being quoted high auto insurance rates by major insurers for the minimum liability coverage required by those states. More than half (56 percent) of the rate quotes to two typical moderate-income drivers were more than $1,000, and nearly one-third of the quotes (32 percent) exceeded $1,500.
The research, which uses the websites of the four largest auto insurers nationwide – State Farm, Allstate, Progressive and GEICO – also reveals that rate quotes are often highly variable. Quotes to the same consumer differ considerably. For example, in one city, price quotes from these companies to the same woman ranged from $762 to $3,390.
"It’s difficult to understand how insurers can justify charging more than $1,000 a year for minimum insurance coverage to drivers who have perfect driving records for many years," said CFA Executive Director Stephen Brobeck. "It’s also difficult to understand why the same driver is being quoted rates from different insurers that vary so considerably. Insurers say rates reflect risk and cost, but if this in fact is the case, why do their assessments of these factors differ so radically?"
J. Robert Hunter, CFA’s director of insurance and former Texas insurance commissioner, called on state insurance commissioners to thoroughly investigate these issues: "Given the fact that all states except New Hampshire require drivers to carry auto insurance, insurance commissioners have the responsibility to ensure that these drivers are charged fair, affordable rates. Our research suggests that most rates charged moderate-income drivers are neither fair nor affordable."
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