Study: Insurers Bill Lousy Rich Drivers Less Than Poor Good Ones

Sept. 27--A national consumer group called out car insurers Progressive and Geico for charging well-off drivers with DUI arrests, accidents and tickets lower premiums than they charged modest-income drivers with safe records, based on its research released Monday.

In contrast, State Farm was most likely to reward good drivers regardless of economic status among the top five U.S. insurers, the Consumer Federation of America found.

"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, the group's director of insurance and former Texas Insurance Commissioner. "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 survey released Monday had no Florida example, but found an Atlanta driver of moderate income and a safe driving record would pay Progressive $1,724 a year , or $490 more than an upper-income driver with a serious at-fault accident.

Progressive and Geico officials declined comment, referring questions to industry groups.

"Insurance companies don't look at your income," said James Lynch, chief actuary for the industry-funded Insurance Information Institute. "They don't care about your income. They care about how much risk you present, and that is what they base their price on."

Yes, but consumer advocates say some companies achieve a similar effect by charging more for factors associated with lower economic status -- such as being a renter, unmarried, or failing to have insurance in the previous six months.

"Progressive and GEICO consistently charge upper-income bad drivers less than moderate-income good drivers," the consumer group said. "The premium for a basic auto insurance policy from these two companies cost more for a good driver with a moderate-income than for a higher-income driver with a recent accident and/or violation on her record 78 percent of the time."

CFA officials contend some insurers want to favor wealthier customers to sell them other policies or products.

A spokeswoman for Florida's Office of Insurance Regulation had no immediate comment.

The consumer group said it tested prices for Allstate, Farmers, GEICO, Progressive, and State Farm in Atlanta, Baltimore, Chicago, Jacksonville, Jersey City, Los Angeles, Kansas City, Minneapolis, Oklahoma City, and New York City.

In each place, CFA said it tested female drivers, both 30 and living at the same address, driving a 2006 Toyota Camry. The consumer group said the drivers differed only in personal characteristics tied to income.

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