Good drivers covered by high risk automobile insurance companies can be difficult to find that when seeking a new coverage from the standard insurer, that stigma can be removed, a new analysis tells.
According to an analysis by the Consumer Union of America, who switch from high-risk or “non-standard” auto insurers to a larger standard insurer, they can refer to higher rates, even if they have safe driving records.
The three main mainstream insurers often quote drivers who refer to a lot of premiums compared to the large drivers’ quotes, which were previously insured by large standard insurers, found analysis
Insurance consultant Douglas Hailer for the study of the federation said that this practice could harm the drivers in low-and-middle-income communities, so that they could be hard at affordable insurance rates. Often, he said, in low-income or implied areas, drivers have some options other than non-standard insurance companies, even if they are recording themselves as clean driving. But once they are connected to non-standard policies, they can be penalized, if they try to go in mainstream coverage, he said.
For analysis, Mr. Heller and a colleague had tested whether quotes in 20 cities of seven major insurance companies were different depending on whether the customer receiving the quote was switching from a small non-standard insurer Was there. The researchers sought quotes for a fictional female driver with an ideal driving record; First of all, he said that he had already covered coverage with a major insurance company, then he said that his coverage was with a non-standard company.
In most cities, where citations were available, three big companies – Alstate, Farmer and American Family – used the previous insurer of a driver as a factor in determining the new premium cited, found in the study.
In those cities, the Allstate had quoted a 15% higher rate for a good driver, which was previously covered by high-risk carriers such as safe auto insurance and equity insurance in comparison with the state.
Farmers and American families paid an average of 9% more for pre-coverage through non-standard insurance companies than state farm.
In one instance, the Federation found that Allstate had referred to a driver in Queens, which was about $ 4,200 of annual insurance when the former insurer was a state farm. But Allstate cited more than $ 5,000 driver when the former insurer was one of two non-standard carriers.
“If someone’s driving experience shows that it is less risk,” Mr. Heller said, “then it does not mean using this fact that he was first insured against a non-standard company against him . ”
The federation had no data on how often the driver was switched.
It has also been found in the analysis that the practices are different from the insurer and the market. Olstate has increased rates of some customers coming from non-standard insurance companies in 12 cities, but in reality, rates have decreased in three cities (Pittsburgh, Seattle and Tampa, FL).
In some cases, the effect was highly localized; GIKO had quoted rates of more than 72 percent for drivers in Tampa, which were already coverage through a non-standard carrier but did not use such information in price policies in any other city Was there. (Xiao refused to comment.)
Three major companies – State Farm, Progressive and Liberty Mutual – did not increase rates in relation to drivers’ pre-insurers, found in this study.
Company spokesman Justin Herden said, “Risk is based on insurance prices so low-risk drivers can pay less than high-risk drivers.” Allstate says, “Allstate pricing” has been determined by the risk and cost. When establishing insurance rates, factors like income or caste are not considered, he said.
An American family spokesman, Linda Wagerner, said in an email that a driver’s pre insurance from a non-standard carrier was used to determine “one of several factors” auto premium. Statistics show that compared to those coming from standard policy, there is a high likelihood of future loss of customers coming from non-standard policy. “As a result,” she said, “their rates are different to reflect different levels of risk.”
The farmer did not respond to the request for comment
According to the Federation, non-insurers have sold about $ 7.5 billion in auto insurance in the United States, which represents approximately 7 percent in the auto insurance market.
David Schneider, Vice President of Policy Development and Research with Property Inconvenience Insurer Association of America said that the analysis of the Federation shows that insurance companies use “broad diversity” of practices while considering a driver’s first coverage, Which suggests a competitive market. “It shows that companies are not doing it all the way,” he said.
This report is the latest in a series of analysts by the federation, on which the low- and middle-income consumers may be affected by the use of various diagnostic-related criteria to set auto insurance rates.
Here are some questions and answers about auto insurance:
How can I get the lowest premium when switching from non-standard auto insurer?
Since the former insurer is different in determining the usage rate of coverage, it is understandable to get quotation from many insurance companies, Mr. Heler said. Now companies are easy to get quotes from online, but they also recommend calling two or three local agents.
What other costs, except for the premium, should I consider it?
Be sure to ask about fees, not just premium, Mr. Heller said. Especially with non-standard insurance companies, there is often a “policy fee” of $ 30 to $ 50 for purchasing coverage, and additional charges if you pay in installments or add additional cars in the policy, then later. After obtaining a quotation, he said, “Make sure you know all the hidden costs before deciding which company you are giving the best price.”
Do all states allow insurers to consider the criteria related to clinical use in setting auto rates?
Some state rates are used to determine the credit history, or the use of the business and academic level of an applicant repeatedly. Gov Andrew Cuomo last month proposed to ban the use of education and business in the establishment of rates in New York, unless the insurers can provide proof to the state financial services department, the criteria should not be in those rates which are “wrong” Discriminatory Proposal is subject to comment period of 45 days
Policy analyst for Consumer Union, Chuck Bell said, “Good drivers should not be penalized with more premium because they have a low-paid job or have not gone to college”, which supports the proposal.
However, changes can be a negative result for some drivers, said Mr. Snyder. For example, this could prevent insurance companies from giving popular “good driver” discounts to some people based on business because they often do with teachers.
Source: Best Health Insurance UK