Auto Insurance Companies Accused of Increasing Rates Based on Education and Occupation

auto insurance companiesAuto insurance companies are in the hot seat after a consumer group revealed that some use unfair practices when determining coverage rates. The group conducted a study and found that drivers seeking coverage with similar characteristics could face drastically different auto insurance rates, due to non-driving related differences such as occupation and education.

Auto Insurance Companies Give Drastically Different Rates to Similar Customers

The Consumer Federation of America (CFA) conducted a study examining two hypothetical drivers seeking insurance. The two drivers were given the same general characteristics (30-year-old women, same experience on the road, similar zip codes, seeking a minimum amount of coverage).

The study gave the two drivers a handful of differences. One woman was single, rented her house and hadn’t had insurance for 45 days. She was spotless on the roads, with no accidents or tickets.

The other woman was married, earned a high income, had a graduate degree and was a homeowner. She had been at fault in an accident that caused $800 worth of damage within the past three years.

According to the study, in two-thirds of the 60 cases studied, large auto insurance companies offered higher premiums to the woman with the spotless record. And in more than three-fifths of the cases with higher premiums, the amount offered to the safe driver exceeded that of the unsafe driver by at least 25 percent.

The CFA concluded that some insurers are using education, earnings, occupation and other factors to determine auto insurance rates, which is unfair to most drivers.

Tips for Lowering Auto Insurance Rates

If you believe you have been offered quotes that are higher than you deserve, there are a few things you can do to lower your auto insurance rates:

  • Ask the insurer for discounts: Some insurance companies offer discounts for everything from bundling policies to buying insurance via the company’s website to provide cheap insurance rates.
  • Adjust the deductible: Another option to consider is agreeing to a higher deductible for comprehensive and collision coverage, which lowers the premium amount. But before taking this step, be sure that you actually will have the deductible amount set aside in the event that you are in an accident and need the money.
  • Shop around: If you run into a quote you don’t like, you are not required to purchase the coverage. Instead, shop around with other auto insurance companies until you find a quote you’re satisfied with.

Having an insurer charge you more for coverage based on factors such as education or occupation can feel unfair, but for now companies are able to offer auto insurance rates based on factors they choose. It’s good to know, however, that there are other options available to help you reduce the cost of your coverage.