Some major auto insurers charge higher rates to
drivers with less education and lower-status jobs.
Among the findings of a Consumer Federation of
America analysis of the sale of minimum liability coverage, which state
governments require, are:
- GEICO and Progressive often charge a factory worker
with a high school degree far higher annual premiums than a plant supervisor
with a college degree.
- Liberty Mutual charges a high school graduate
higher annual premiums than a college graduate.
- Farmers charges those who are neither professionals
nor certain government workers 5 percent higher premiums.
“Auto insurers charge high
premiums for minimal coverage to most working people, even those with perfect
driving records, who live in urban areas,” said Stephen Brobeck, the federation’s
executive director. “Since most Americans need a car and almost all states require
the purchase of auto insurance, many lower-income workers are faced with the
choice of paying these high, and often unaffordable prices, or breaking the law
by driving without insurance.”
The federation estimates that one-quarter to one-third
of drivers with household incomes under $36,000 – 40 percent of all households –
are uninsured.
The federation used the websites of insurers to
determine whether they use education and occupation in their pricing and, if
so, the impact of the use of these factors.
The analysis included the 10 largest auto insurers –
State Farm, Allstate, GEICO, Progressive, Farmers, USAA, Liberty Mutual,
Nationwide, Travelers, and American Family – in 10 major urban areas in different
parts of the country – Hartford, Baltimore, Atlanta, Louisville, Chicago,
Houston, Denver, Phoenix, Oakland, and Seattle.
Five of the 10 auto insurers – GEICO, Progressive,
Liberty Mutual, Farmers, and American Family – apparently use education and
occupation in their rate-making in most states, according to the federation.
To help make auto insurance more affordable to
working people, the federation is working to curtail the use of discriminatory
factors in rate-making and to create state programs, such as the one in
California, that allows lower-income, good drivers to buy required liability
coverage at reasonable rates, Brobeck said.
In the past 18 months, the federation has released
a series of reports showing that low- and moderate-income drivers
in urban areas are charged high, and often unaffordable, auto insurance
premiums for the minimum liability coverage required by all states except New Hampshire.
The reports also reveal discriminatory practices that disadvantage drivers who
are single, rent, lack continuous insurance coverage, live in moderate-income
area, and, in this latest analysis, have less education or work in low-paying,
low-status occupations, he said.
