A recent press release from the Consumer Federation of America (CFA) comments on how auto insurance companies charge good drivers as much as 47 percent more for basic liability auto insurance if they don’t own their home! Based on an analysis by the CFA, it found that premiums average 7 percent higher (about $112 per year) for drivers who rent instead of own homes. This is a disadvantage for many people, since low-to-moderate income individuals are usually the ones to rent. Thus, they are the ones paying more for auto insurance.
CFA’s Insurance Director stated, “To raise people’s auto insurance premium because they can’t afford to buy their homes unfairly discriminates against lower-income drivers.” I can’t help but agree with this statement. Auto insurance should reflect a person’s ability to drive, not their ability to own a home. And yet, insurance companies are targeting these people.
Highest Rate Differences
Based upon its analysis, the CFA found that the following cities had double-digit percentage increases between what it charged renters and homeowners:
- Tampa: 19% more for renters than homeowners (Allstate)
- Baltimore: 23% more (Liberty Mutual)
- Newark: 26% more (Liberty Mutual)
- Louisville: 47% more (Farmers Ins.)
Only one city had an insurance premium decrease for renters—Chicago.
According to the CFA and its studies, insurance companies look at other factors to raise premiums. These studies show that good drivers with lower credits scores, blue collar jobs, no college degree, and who aren’t married pay higher premiums.
As a consumer, just like you, I can’t believe economic factors determine our insurance premiums. In Colorado, you are required to have car insurance, and learning of these tactics just shows how important it may be for you to contact an experienced attorney if you are ever injured in an auto accident. Clearly, the insurance company isn’t in it for you; they are, sadly, in it for the money.
If you enjoyed this blog, you may like the following:
- What You Need to Know About Car Insurance
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