(Bloomberg) -- A customer’s credit score may matter more than a drunken-driving conviction for auto insurers setting premiums, Consumer Reports said, citing a review of price quotes in the U.S. from more than 700 firms.
A hypothetical group of adult drivers with clean driving records and poor credit paid $1,552 more on average in Florida than the same drivers with excellent credit and a drunk-driving offense, the consumer advocate said Thursday in a statement. Throughout the U.S., people with “good” credit paid $68 to $526 more than those with the best scores, the group said.
“If a car-insurance company calculates that a consumer’s credit score isn’t up to its highest standard, it often charges a higher premium -- even if the customer had never had an accident,” Consumer Reports said in its statement. “Consumers have a right to expect that their car-insurance premiums are based on meaningful behavior such as their driving record.”
Consumer Reports, a non-profit organization, said it analyzed more than 2 billion quotes from U.S. insurers including Allstate Corp., Berkshire Hathaway Inc.’s Geico, Progressive Corp. and State Farm Mutual Automobile Insurance Co.
Single, divorced or widowed people often pay more for auto policies than married couples, according to a Consumer Federation of America report published this week. In a previous study, the CFA found that the largest U.S. auto insurers weigh occupation and education levels more than driving records to set rates for low-income customers.
“The fact that insurance-based credit scores are an important part of setting rates is nothing new,” Robert Hartwig, president of the Insurance Information Institute, said in a phone interview. “It is strongly predictive of loss, and that’s a net benefit to consumers.”
California, Hawaii and Massachusetts are the only states that prohibit insurers from using credit scores to set prices, according to Consumer Reports. The complete study is published in the Consumer Reports magazine September issue.
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
