Upper-income drivers who have DUIs sometimes pay less for auto insurance than moderate-income customers who have no accidents or tickets on their record, according to the Consumer Federation of America.
Read more: Car insurance rates: Geico vs. Progressive vs. Amica vs. State Farm
Study: Bad rich drivers pay less for auto insurance
In a new report, the organization said your auto insurance premiums are often more closely aligned with personal economic characteristics than your actual driving history.
The CFA called out Progressive and Geico for consistently charging upper-income bad drivers less than good drivers who don’t have as much money. State Farm was the most fair, according to the study. Allstate and Farmers were also tested.
“It is profoundly unfair that a driver with a moderate income and a perfect driving record is often charged more for auto insurance than higher-income drivers with DUIs, accidents and speeding tickets,” said J. Robert Hunter, CFA’s Director of Insurance. “As long as state governments require drivers to buy insurance, they should require insurance companies to price their product based on how we drive, not who we are.”
The CFA tested online premium quotes for the nation’s five largest auto insurers in 10 cities, comparing two typical 30-year-old female drivers with different socio-economic characteristics.
Upper-income driver
- Bank executive
- Master’s degree
- Homeowner
- Married
- Has carried auto insurance with the same carrier for 3 years
Moderate-income driver
- Bank teller
- High school degree
- Renter
- Unmarried
- Has not had auto insurance for 6 months because she has not had a car
More than half of the time, moderate-income good drivers pay more than upper-income drivers who caused accidents or had multiple points on their record, the study concluded.
Perhaps even more surprising, 70% of the time a moderate-income driver with a perfect record received a basic liability insurance quote for more than a high-income driver with a recent DUI conviction.
Take a look at this chart from the Consumer Federation of America:
USA Today has reported that an executive with the Property Casualty Insurers Association of America said this study is flawed because insurers don’t consider income when you call them up or go online for a quote.
We do know that a number of factors aside from your driving history help determine your auto insurance rate, including your age, home address, marital status and even your credit score.
Shop for a lower insurance rate!
Since insurers weigh factors differently, it’s important to periodically shop around for your auto insurance. We recently called four providers to request quotes and found a $605 difference in the rates for the same 6-month policy. Find the results here.
Clark recommends comparing car insurance prices every three years, but you can do so more often if you’d like. And you don’t need to wait until your renewal date to shop around.
Read more: 4 hidden factors that help determine your auto insurance premiums
