CR Investigates: Auto Insurance Rates

On Your Side: What you pay for insurance often involves a lot more than just your driving record

In most states, you’re required by law to carry car insurance. Maybe you’re a loyal customer or you shop around for rates. But do you really know which factors have an impact on your premium? A new Consumer Reports investigation reveals that what you pay for insurance often involves a lot more than just your driving record.

The amount that insurers charge should be based on your risk as a driver. But CR found that some insurance providers are charging higher rates based on the amount of education you have or your job title, and it says that’s systematically and blatantly unfair.

CR requested 869 unique auto insurance quotes from nine different insurers across six states and Washington, D.C. It found that three major auto insurance companies—Geico, Progressive, and Liberty Mutual—quoted higher average premiums to consumers who had less education.

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Insurers should really focus on the number of miles you drive per year, your driving experience, and your safety record.

Geico responded to CR by saying “The standards we use to determine insurance rates are actuarially sound and help promote healthy competition within the marketplace.”

Liberty Mutual said it “looks at dozens of factors when determining a customer’s overall risk, any of which must be permitted by state insurance regulation.”

Progressive didn’t respond to CR’s request for comment on the findings.

The average consumer shopping for insurance has no idea which factors companies are using to set their rates. A good thing to do is to seek multiple quotes from different insurance companies to make sure that you’re not overpaying.

 There may be some good news ahead as bills in some state legislatures aim to fix the problem. They would ban the use of education, occupation, and credit scores when quoting car insurance premiums. To see Consumer Reports’ full report, go to CR.org.

In conjunction with its investigation, Consumer Reports is launching an online petition www.consumerreports.org/autoinsurance 
to Geico and Progressive calling on the companies to stop using education level and job title to set auto premiums.

CR sent letters Thursday to state insurance commissioners in 46 states and the District of Columbia calling on them to ban those rating factors.