Consumer Reports says it found that most auto insurance companies use about 30 elements of the almost 130 available in a credit report to construct their own secret score for policyholders, and that credit scores could have more of an impact on premiums than any other factor. “At most major companies, rates are nearly always higher for single, separated and divorced drivers than for married drivers”, the study continued, with the figures in the graph above mostly replicating the increases found for all single, divorced and separated individuals – regardless of sex – as well as for the widowed (with the exception of Geico, who’s numbers varied “unpredictably” between each class of marital status). With just a “good” score, it is more than 17-hundred dollars, and with a poor score, more than 38-hundred dollars.
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In Texas, the average annual premium for those with an excellent auto insurance credit score is $1,338.
If you’ve been paying attention to how auto insurance has evolved over the last two decades, these kinds of findings won’t come as a shock.
Insurers “say that married people deserve lower rates than others because they tend to drive more responsibly”, CFA reports, but the study they often cite in support of this position “was based on data collected in New Zealand around 1990 involving only 138 injuries, a substantial minority of which involved driving motorcycles”, the group notes.
“What we found is that behind the rate quotes is a pricing process that judges you less on driving habits and increasingly on socioeconomic factors”, the consumer organization reports.
“Using non-driving-related factors … raises serious questions of fairness”, Hunter says. But Consumer Reports’ study revealed that some of the most advertised discounts-such as the ones for bundling home and vehicle insurance, or installing anti-theft equipment-actually don’t save people much money. Because insurers aren’t exactly forthcoming in explaining how they come up with rates (shocking!), Consumer Reports researchers analyzed more than two billion auto insurance price quotes from 700 companies for hypothetical drivers all over the country.
You can see the report for free online at http://bit.ly/1OE18Rn, with state-by-state numbers for the same sample customer.
“It’s hard to imagine how just being a widow makes you a worse driver”, J. Robert Hunter, CFA’s director of insurance, said Monday in a conference call with reporters.
Sometimes, insurance regulators fight back.
The consumer group has sent letters to Maryland, Virginia and other state insurance commissioners asking them to investigate whether insurers are fairly pricing their policies without discriminating against unmarried and low income drivers.
Variations in state regulation add to consumers’ confusion.
Neither Pennsylvania nor New Jersey is on the list, but consumers in this region may be protected, anyway.
An insurance-backed group said insurers set rates based on criteria correlated with losses. “But it can’t be used to downgrade your rating”. Quotes from the six major U.S. insurers were an average of 14% higher for widows than for married drivers with otherwise similar profiles.
“If you think the price is too much and you can find a better deal, go out and find it”, Lynch said.
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Most drivers probably know that if they get into an accident, their insurance rates are also likely to take a hit. “Over the past 15 years, insurers have made pricing considerably more complicated and confusing”, the report states.
