A consumer watchdog group says a high-school graduate with a
blemish-free driving record will pay more for car insurance than a
college-educated counterpart with a recent accident.
The Consumer Federation of America (CFA) compared rates from
five car insurance carriers for two women, both 30 years old and
living on the same street. But one driver was single, had a
high-school education and rented a home. The other was married, had
a master's degree and owned a home.
Each driver carried a black mark: The lower-income driver had a
lapse in coverage of 45 days, and the higher-income driver had an
at-fault accident with $800 in damage.
The CFA found that the safer driver -- the one with no accidents
on her record -- would pay more for liability insurance in the
majority of comparisons it ran for 12 cities. In most cases, the
difference was at least 25 percent.
"State insurance regulators should require auto insurers to
explain why they believe factors such as education and income are
better predictors of losses than are at-fault accidents," said J.
Robert Hunter, spokesperson for the CFA and a former Texas
Insurance companies often offer lower rates or outright
discounts to drivers who are married, own a home or work in a
particular occupation. (See our
Guide to Car Insurance Discounts
Why no insurance is worse than a minor wreck
CarInsurance.com consumer analyst Penny Gusner notes that a
lapse in coverage carries much more weight than a relatively minor
accident. The $800 tally for the better-educated driver's accident
is low enough to fall below many insurers' threshold for a rate
increase, she says, but "a lapse in coverage is a big no-no."
There may be benign reasons for a gap, such as a military
deployment, she says, but insurers tend to look at the dark
"If you don't have insurance, it usually means you were canceled
for non-payment or non-renewed because your driving record took a
The CFA report also took the insurers -- Allstate, Farmers,
Geico, Progressive and State Farm -- to task for the huge
variance in rates between cities. Allstate, for example, would
charge the same driver $850 in St. Louis but $3,292 in
A CarInsurance.com study last year found an even greater
disparity, with the same driver paying as little as $730 for full
coverage in Bullhead City, Ariz., and $4,214 in Highland Park,
Mich. (You can see how rates for full coverage vary around the
country with the site's
Nosy Neighbor tool
In 35 of the 60 cases studied, the insurers either quoted annual
premiums in excess of $1,000 or refused to quote a price.
"Unfortunately, the discriminatory practices of auto insurers
mainly harm low- and moderate-income drivers," noted Stephen
Brobeck, CFA executive director.
The group praised State Farm for offering lower rates to the
safer driver every time.
"If they can be a successful company without using highly
discriminatory factors, other large companies should be able to do
so as well," says CFA's Hunter.