Insurers Raise Rates After Crashes – Even If Driver Not To Blame

Feb. 13--Drivers who get rear-ended in Chicago and other major cities are also likely to get hit with rate increases from their insurance companies -- even when they are not at fault.

A study released Monday by the Consumer Federation of America found premiums can rise by hundreds of dollars per year for drivers involved in crashes that are not their fault, with Chicago customers facing average increases of 10 percent or more.

"Insurance companies are penalizing people who have done nothing wrong," said Doug Heller, who conducted the research for the federation, a Washington-based nonprofit consumer watchdog. "If you're unlucky enough to have been rear-ended while at a stoplight, that's not a justification for jacking up your rate. It's not fair."

The study examined rates from five insurance companies in 10 metro areas, with results varying by insurer, location and the income level of the driver. Across the country, lower-income drivers are more likely to be penalized by rate increases, the study showed.

Progressive was the most aggressive at penalizing drivers involved in collisions that weren't their fault, raising rates by an average of 16.6 percent, followed closely by Geico and Farmers, which bumped up rates by 14.1 percent and 11.1 percent, respectively.

Northbrook-based Allstate raised rates by an average of 4.8 percent, while Bloomington-based State Farm did not impose any penalties on drivers reporting accidents that weren't their fault.

"State Farm never penalized a customer because they had been involved in an accident, if the accident was not their fault," Heller said. "Progressive raised rates by $300 a year, or about 17 percent, in most states that allowed companies to punish innocent drivers hit by another driver."

Progressive, Farmers, Geico, Allstate and State Farm did not respond to requests for comment, with several companies referring inquiries to the Insurance Information Institute, a New York-based organization supported by the insurance industry.

Steve Weisbart, chief economist for the institute, questioned the methodology of the study but didn't necessarily dispute the findings.

"The premium is based on anticipated claims," Weisbart said. "If the company chooses to surcharge you after you've had a not-at-fault accident, it is convinced that you are likelier to have an at-fault accident in the future."

Where you live also affects how large a rate increase you'll get socked with after a crash that's not your fault, with the most severe penalties for drivers in Queens, N.Y.; Kansas City, Mo.; Chicago; and Baltimore, Heller said. The average premium hike for Chicago drivers was $98 per year, according to the study.

Drivers in two of the markets -- Los Angeles and Oklahoma City, Okla. -- didn't see any rate increases because they are prohibited by state law, Heller said.

The practice of raising rates on drivers who aren't at fault discourages them from filing claims, Heller said, calling it an "abuse of the insurance product" that customers bought in good faith.

"Most people understand that if they cause an accident, their insurance is going up," he said. "If they're an innocent victim of some reckless driver, there shouldn't be a penalty for that. It's not fair."

rchannick@chicagotribune.com

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