Auto insurers gouge lower-income safe drivers, study finds

https://www.consumeraffairs.com/news/auto-insurers-gouge-lower-income-safe-drivers-study-finds-012615.html

In the 15 cities CFA surveyed, annual premium quotes by the nation’s five largest auto insurers — State Farm, GEICO, Allstate, Progressive, and Farmers — were almost always more than $900 and were usually more than $1,500.

In a related national opinion survey undertaken by ORC International for CFA, nearly four-fifths of respondents (79%) said that a fair annual cost for this auto insurance coverage was less than $750. One-half (50%) said that a fair annual cost was less than $500…

The report faulted state governments for allowing major auto insurers to charge higher premiums based on income and other factors not directly related to safety…

“Any economist will tell you that price ranges greater than 100% for essentially the same product reveal lack of true price competition,” noted CFA’s Brobeck…

“As well as denying economic opportunity, these high premiums pressure many lower-income drivers to break the law by driving without insurance,” Hunter said. “We’ve estimated that one-quarter to one-third of these drivers have let their policies lapse or never purchased them in the first place, because they confront the Hobson’s choice of paying for insurance or more basic necessities like food, rent, or electricity.”

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