CONSUMER REPORTS — In most states, you’re required by law to carry car insurance. A new Consumer Reports investigation reveals what you pay for insurance often involves a lot more than just your driving record.
Cuqui Rivera was a loyal Liberty Mutual car insurance customer. But when she was up for renewal this past December, she thought it would be a good time to shop around just to make sure she wasn’t paying too much.
Rivera said, “They had already sent me the card and everything, so I said, Wait a minute, let me just wiggle around.”
She says she wasn’t really expecting to save a lot of money, but when she got a new auto quote from CURE, a regional insurance company based in New Jersey, she was shocked to see how much she’d save.
“NJ Cure was very very much lower than Liberty Mutual. It was clearly upsetting,” Rivera said.
Then it struck her: Rivera didn’t go to college. And she thinks that’s part of the reason she was able to find a policy for so much less with CURE, even though her policy with CURE offered a bit less coverage. The discrepancy is all too common according to Consumer Reports.
“The amount that insurers charge should be based on your risk as a driver, but we are seeing that some insurance providers are charging higher rates based on the amount of education you have or your job title, and we think that’s systematically and blatantly unfair,” said Chuck Bell, Consumer Reports Consumer Advocate.
Consumer Reports requested 869 unique auto insurance quotes from nine different insurers across six states and Washington, D.C. It found that three major auto insurance companies – Geico, Progressive, and Liberty Mutual – all quoted higher average premiums to consumers who have completed less education.
“Insurers should really focus on the number of miles you drive per year, driving experience, and driver safety record,” Bell said.
Geico responded to Consumer Reports saying “The standards we use to determine insurance rates are actuarially sound and help promote healthy competition within the marketplace.”
Liberty Mutual says it, “Looks at dozens of factors when determining a customer’s overall risk, any of which must be permitted by state insurance regulation.”
Progressive did not respond to our request for comment on the findings.
Bell said, “The average insurance shopper has very little idea which factors companies are using to set their rates. A good thing to do is to seek multiple quotes from different insurance companies to make sure that you’re not overpaying.”
Not surprisingly, Rivera switched auto insurance companies and saved a bundle.
“It’s a blessing not only to figure this out but to also carry this message to so many people that I know are struggling,” Rivera said.
There may be some good news ahead as bills in some state legislatures are aiming to fix the problem. These would ban the use of education, occupation, and credit scores when quoting car insurance premiums.