Consumer group alleges unfair practices in auto insurance industry

[davidn3600]

Consumer Federation of America alleges unfair insurance practices

A recent study from the Consumer Federation of America revealed some odd findings when it comes to auto insurance.

The CFA used two hypothetical drivers and sought to get them insurance from a variety of carriers. Both drivers were 30-year-old women who had the same amount of experience on the road, lived in similar ZIP codes, and sought the minimum amount of coverage.

As for the differences, one woman was single, rented her house, and hadn't had insurance for 45 days. She also had a spotless record on the roads: no accidents and no tickets. The other woman was married, a high earner with a graduate degree, and a home owner. She had been at fault in an accident that caused $800 worth of damage within the past three years.

Guess who was offered higher premiums most of the time? From the report:

http://autos.yahoo.com/blogs/motoramic/consumer-federation-america-alleges-unfair-insurance-practices-233557085.html

The full study with actual results can be read here:
http://www.consumerfed.org/pdfs/PR.AutoInsurancePremiums1.28.13.pdf

[octoberlib]

1. In some states insurance companies are allowed to do credit checks

and base their premiums on your credit score. That might be what happened here. It sucks.

[pipoman]

3. Anyone know if there is any actuarial

evidence that credit score effects risk on auto insurance?

[pipoman]

2. When insurance is required by law

there should be a minimum coverage policy offered by all carriers in the state for a statutory low price.

[dballance]

4. I Had an Agent Explain to Me When You Have a Break in Coverage

they don't have a complete history on you. So you become an unquantified risk and therefore they charge you more.

I think they made a mistake using one driver with continuous coverage and one without. That's not really apples to apples.