When Non-Driving Factors Affect Auto Insurance Premiums

The following is an excerpt from an article in:


The New York Times
Saturday, September 29, 2012

When Non-Driving Factors Affect Auto Insurance Premiums

By ANN CARRNS

Automobile insurers may use factors unrelated to driving, like education and occupation, in determining rates.

Now, a consumer group is urging state insurance commissioners to restrict insurers' ability to use those factors, arguing that the result has been unfairly high rates for lower-income drivers. Stephen Brobeck, executive director of the Consumer Federation of America, said in a call this week with reporters that premiums should mainly reflect factors like accidents, speeding tickets and miles driven.

The federation analyzed auto insurance premiums quoted on the Web sites of the five largest insurers (State Farm, Allstate, Geico, Progressive and Farmer's) to price minimum liability coverage in five cities. Using an example of coverage for a 35-year-old woman with a good driving record, the study obtained quotes while varying characteristics like marital status, education level, occupation, home ownership and gaps in insurance coverage. Her driving record was the same in all instances.

The group found that in most cases, annual premiums were much lower if the woman was a married homeowner with a college degree, a professional job and continuous insurance coverage. In four of the examples, the premiums fell by at least 68 percent.

Premiums tended to be high if the woman was single, rented in a moderate-income area, had a high school degree, worked as a bank teller or clerical worker and had a gap in insurance coverage.

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