Unfair Insurance Rating?

Is now justification for those safe drivers out there that believe that the insurance rating on their policies doesn’t match their driving record?

Are insurance companies really using unfair insurance rating factors?

Going through the insurance rating process for insurance quotes is a necessary evil; just like the actual product that we are getting the quote for. Many people don’t understand why they are charged so much for insurance when they have clean driving records.

But like we say over and over again here at Car Insurance Guidebook, insurance rating takes into account many different factors which is why no two policies are the same.

However, a recent study by the Consumer Federation of America has given backing to those that feel they are being unfairly rated for other factors that have nothing to do with how safe they drive.

The Insurance Rating Study

The study from the Consumer Federation of America (CFA)started by creating the profiles of two 30-year-old women who lived in the same zip code and had the same number of years driving. Aside from the actual driving record, age and location should be the two other biggest factors that determine premium during the insurance rating process (or so the insurance companies have been telling us for years).

While creating these profiles, the CFA also made one woman married, a high wage earner with a graduate degree, and a home owner. She also had car accident on her driving record that happened within the last 3 years that caused $800 worth of damage.

The other woman was single, had been without insurance for the last 45 days, was a renter not a homeowner, and had a clean driving record.

The Results of the Insurance Rating Study

After women representing each of the profiles had called around to the different insurance companies to get quotes on the same minimum amount of coverage, here is what the results were:

“In two-thirds of the 60 cases studied, large auto insurers quoted higher premiums to safe drivers than to those responsible for an accident. And in more than three-fifths of the cases with these higher premiums, the premium quoted the safe driver exceeded the premium quoted the unsafe driver by at least 25 percent.”

What This Tells Us about Insurance Rating

Basically, this study is telling us that insurance rating is using other factors that have nothing to do with your driving record, much more than they probably should. After reading the study and from my own experience in the insurance industry, getting insurance quotes is becoming similar to applying for a credit card with what factors the insurance companies use to determine how much to charge you.

However, I cannot agree with the study calling insurance companies unfair from the results of their study. Why? Because the supposedly safe driver had a 45-day lapse in her insurance; which means she was driving around without insurance coverage for 45 days. To an insurance company (and the legal system) this is just as unsafe as an accident and the insurance rating is going to reflect that.