While 15 minutes might wind up saving you 15 percent, it appears that four years in college is worth even more when it comes to auto insurance.
The Consumer Federation of America on Monday said an analysis of major auto insurers such as Geico and Progressive shows higher rates for drivers with less education and lower-status jobs.
Some of the differences in rates based on education level are large. The federation said state-required minimum liability coverage from Geico for a Seattle factory worker with a high school diploma runs $870 a year, 45 percent higher than a plant supervisor with a college degree, who would pay $599.
“The American public knows that it is unfair for auto insurers to use factors like education and occupation in setting rates,” said J. Robert Hunter, the federation's insurance director and the former Texas insurance commissioner. “In effect, auto insurers are discriminating on the basis of income and race. States should prohibit the use of these demographic factors that bear no logical relation to insurer risk.”
The institute, an insurance-industry trade group, said competition is thriving among insurers, and that anyone unhappy with the deal they are getting from a company will find enthusiastic responses from its rivals.
“No matter their station in life, dozens of auto insurers are competing for the business of every driver who resides in the cities the CFA surveyed for its report,” said a written statement from Robert Hartwig, the institute's president. “These market forces have created a favorable situation for the nation's drivers when considering what they've had to pay for other products and services essential to their daily lives.”
The consumer federation analysis was conducted in May and June. The research concentrated on Hartford, Conn.; Baltimore; Atlanta; Louisville, Ky.; Chicago; Houston; Denver; Phoenix; Oakland, Calif.; and Seattle. The analysis used the websites of the insurers to examine the use of education and occupation by the 10 largest auto insurers by market share: State Farm, Allstate, Geico, Progressive, Farmers, USAA, Liberty Mutual, Nationwide, Travelers and American Family.
The survey found that five of the companies — Geico, Progressive, Liberty Mutual, Farmers and American Family — appear to use education and occupation in most states.
Geico, the analysis said, gives equal weight to education and occupation in many states. In Hartford, the federation said, a factory worker would pay 28 percent more than a factory superintendent, but the factory worker could save 28 percent by getting a college degree.
The highest quote found in the analysis was in Hartford. There, a blue-collar driver with a good driving record was quoted by Allstate at $3,222 in annual premiums. In all, nine quotes for such a driver by the insurers in the various cities exceeded $2,000 a year.
“The quoted prices, especially the nine exceeding $2,000, show that insurers either are overcharging lower-income consumers or are not interested in serving them,” said federation insurance director Hunter.
The Insurance Information Institute also said that auto insurance costs have risen much slower than overall prices. The instiute projects the annual expenditure for auto insurance grew to $819 in 2012, only 4.2 percent more than that same driver paid in 2002. In the same period, the institute said, the Consumer Price Index rose 28 percent.
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