Renters Pay More For Car Insurance

Feb. 09--Drivers who rent rather than own their homes are likely to get charged more -- as much as 47 percent more -- for basic liability auto insurance, according to an analysis of premiums by the nonprofit Consumer Federation of America.

The analysis found most major auto insurers penalize renters, even those with perfect driving records.

The Washington, D.C.-based consumer group is calling on state insurance commissioners and lawmakers around the country to prohibit insurance companies from jacking up auto insurance rates on good drivers based on their homeownership status and to level the playing field for those who rent.

"To raise people's auto insurance premiums because they can't afford to buy their homes unfairly discriminates against lower-income drivers," said J. Robert Hunter, insurance director for the Consumer Federation of America and former insurance commissioner of Texas.

"A good driver is a good driver whether she rents or owns her home," he said. "Insurance companies should not be allowed to target people based on homeownership status."

Using a sampling of insurance quotes across the country for a 30-year-old safe driver, the CFA found premiums averaged 7 percent higher -- about $112 per year -- for drivers who rent. Liberty Mutual penalized renters the most, the group found. Liberty Mutual hiked premiums an average of $307 per year, or 19 percent more, for state-mandated insurance coverage.

For the analysis, researchers tested rates for minimum limits liability coverage in 10 cities from the nation's largest insurers -- State Farm, Geico, Allstate, Progressive, Farmers, Liberty Mutual and Nationwide.

The Consumer Federation of America used company websites to solicit two premiums in each city for a 30-year-old female motorist with a 2005 Honda Civic and a perfect driving record. The only characteristic altered during the testing was whether she owned or rented her home.

While the average increase for renters was 6 percent, there were several double digit percentage increases around the country.

Allstate charged renters in Tampa 19 percent more than it charged homeowners; Liberty Mutual charged Baltimore renters 23 percent more and 26 percent more in Newark; and Farmers Insurance charged renters in Louisville 47 percent more, or $768 more, than homeowners for a basic auto insurance policy.

Geico was the only company tested that did not consider homeownership status in any of the 10 cities.

Pennsylvania Insurance Department spokesman Ron Ruman said insurers are required to provide statistical evidence for any factors used for determining insurance rates. He said Insurance Commissioner Teresa Miller is on record saying she will not approve any rates that are unfairly discriminatory.

After the CFA found in September that insurance companies were charging women who lose their husbands higher rates for car insurance, Commissioner Miller announced she will not approve auto insurance rate filings that contain the so-called "widow's penalty," under which a widow or widower is charged a higher rate solely based on the change in his or her marital status.

Tim Grant: tgrant@post-gazette.com or 412-263-1591.

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