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Poor People Pay More For Car Insurance, Study Finds

poor-people-pay-more-612pbBy Pete Bigelow

Pride yourself on being a safe driver? You might be paying a penalty for that distinction.

The country’s largest auto insurers often charge safe drivers more money for their annual insurance premiums than their more reckless counterparts, according to a study released Monday by the Consumer Federation Of America.

Even if they have better driving records, researchers found that drivers in lower-and-middle income brackets were charged higher premiums than well-to-do drivers in 66 percent of the cases studied. We’re talking more than pocket change. In more than 60 percent of cases studied, the safer driver was charged at least 25 percent more than the one with a checkered driving record.

“What our research at this time, and our earlier reports, show is that this is not a free market at all,” said Stephen Brobeck, executive director of the CFA. “It’s a very uncompetitive market.”

Rather than basing premiums on driving records and distance driven, Brobeck said insurers based their quotes on non-driving factors like education, occupation and home-ownership status.

Researchers checked prices in 12 U.S. cities. In each case, they had two hypothetical 30-year-old female customers living on the same street in the same middle-class Zip code.

One was a single receptionist with a high-school education who rents an apartment, has not carried insurance for 45 days and has never had an accident or moving violation. One was a married executive with a master’s degree who owns a home, had continuous insurance coverage and had an at-fault accident with $800 worth of damage in the past three years.

In every city, Farmers, GEICO and Progressive quoted the safe driver a higher premium than the one who had an accident. In some cases, companies refused a quote for the good driver but provided one for the one with an accident on her record.

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