The Truth About Car Insurance

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By Norma Garcia on Friday, August 7th, 2015

Are you getting taken for a ride?

If you drive a car and buy auto insurance, here’s a “don’t miss” special report from Consumer Reports.

This in-depth two-year investigation is based on 2 billion price quotes involving 700 insurance companies in every ZIP code across the country. There is a lot of great information (all free) about how you can save money and some shocking revelations about how auto insurance works that everyone should know about.

Did you know that your credit score and other factors that have nothing to do with how well you drive can have a big impact on how much you pay for your auto insurance, EVEN IF you are a good driver?  Learn more about the secret score behind your rates and check out the interactive map of the U.S. that shows in graphic detail the impact of credit scores on auto insurance prices.  We found that if you have anything less than stellar credit, you pay more for your insurance, even if you’re a good driver.  Can you believe that in many states a person with a drunk driving conviction but good credit can pay much less for their coverage than a safe driver with a clean record who has poor credit? In Florida, for example, a poor credit score can boost premiums by $2,417, but a drunken driving conviction boosts those premiums by only by $866.  Where’s the logic and justice in that?

If you’re like most people, you’re probably wondering, “Wait, what does my credit have to do with how I drive?”  You’re not the only one asking this question.  Today, Eric Zorn, a columnist at the Chicago Tribune posed the same question and said, “What logic is there – what possible cause and effect –in the idea that a person with lousy credit is also likely to be a lousy driver?”  They also note that there are other reasons to worry about insurance companies using our credit information to decide how much we should pay for our auto insurance.  “Overall credit scores upon which the credit-based insurance score is based, are notoriously prone to error . . .[P]ricing formulas are opaque and proprietary . . .[and] it’s a handy proxy for income—and race-based discrimination in insurance, which is otherwise illegal.”

Oh, yes.  There’s more.  Among other things, Consumer Reports found that some insurance companies are penalizing drivers with higher rates if they think they’re not likely to shop around for a better deal. Could you be that customer who is getting penalized for your loyalty? Read the article and get informed.

Here’s the good news. You can do something with your outrage.  Please sign our Petition demanding fairness in auto insurance. (Scroll until it appears).  We’ll make sure that the 50 state insurance commissioners hear from all of us that we want to be priced mainly by how we drive and not by who insurance companies think we are. It’s time to #FixCarInsurance.

15 responses to “The Truth About Car Insurance”

  1. It’s nice to learn this about car insurance. I like how you said that stellar credit is pretty much necessary to have a low price. We are hoping to get a new policy, so it’s a good thing my credit is impeccable.

  2. Kayla says:

    My sister wants to buy a car that she can use going to work and my parents reminded her to also get car insurance. It was mentioned here that her credit score matters. In addition, having a good credit score will help her pay less.

  3. jack daniels says:

    I Have a better idea, instead of signing petitions to the politicians. we the consumers and the consumers union should create our own insurance company. where all would be charge the same price, be a teen ager or an older person.also here the vehicle car truck bus etc etc can be drive by anybody the owner wants and not who the insurance want. see here is the best way the insurances charge you more and the states slaps u friend you family or coworker (who at same point would need to use you car) with a big ticket of more than a $35O ,Just because u are the only person named on that insurance policy.. the payment would be $15 a month for what any state requires, this would make the consumers union a real Union and not some group that all they do is talk and not action at all SORRY but this is my opinion and suggestion to stop this madness and robbery by the insurances and the states governments against the consumers, the math will show ,that my suggestion will work.
    $15 a month X 100 000000 drivers =$1500 Millions a month this is enough money to cover any accident on any month. also the only exception ,the insurance would not pay it, if you cause an accident under the influence of drugs or alcohol except prescribed medical drugs.now this is for the consumer union group are you guys are willing to came along with me and the consumers to make this thing going? or we the consumers will start our own insurance starting the new year of 2017.

  4. L.v. says:

    I was involved in a four car accident, not my fault. Repairs to all vehicles may exceed coverage by faulting party so I was advised to go through my own insurance for repairs. Total quote was $5300, my insurance offered $2800. Said take it leave it. Decided to submit through faulting party’s insurance. My insurance got wind of it and called to talk me out of it. Insisted I go through them. Why? Something sketchy going on here?

  5. A follow up on my previous post – if you do your banking and insurance with the same company (like USAA, for example, which offers both), it may be easier for you to get better insurance rates because they know more about your banking history.

  6. Pamela McMinn says:

    As a single mother for many years I had a hard time getting any credit and then when I did I paid premium interest rates. And none of it mattered when I paid my house off 4 years early. Had my car paid for Insurance still skyrocketed. And I was still deemed uncredit worthy. My score was low. I did not know about my score until after my house was paid for. I thought having that asset would help. Nope. It was because I took advantage of credit card deals and though I never paid interest on any of them it damaged my credit rating So now this. I am done with this governments way of handling its citizens.

  7. Thanks for posting this article. Can’t believe some insurance companies essentially charge people more for their loyalty because they don’t think the customer will shop around and see competitive pricing. Hopefully there are some car insurance companies that are doing the right thing rather than just what is profitable.

  8. P. Michael Hartman says:

    The last claim I had with an insurance company was in 1969 and that was actually under my parent’s policy. Since then I had a couple speeding tickets in the 70’s and totally clean since. On top of that I have a Class C Commercial Drivers License in Pennsylvania with a Passenger Endorsement transporting clientele to a variety of destinations in different capacity buses and vans with wheelchair capabilities. We have monthly required training on numerous subjects related to the job.

    Now wouldn’t you think that should factor into what I pay for insurance? We are the safest drivers on the highway with the exception of an occasional individual. But such is not the case and change in the methodology used by these companies to establish pricing must be addressed!

  9. Bill Nye says:

    This entire post absolutely ROCKS! Thank you for all the hard work you put into it. It really shows.

  10. Thanks for your car insurance insight. If anyone is in the market for a new car insurance policy I would definitely recommend Marchionne Insurance in Somerville MA and Greater Boston for all of your auto insurance needs!

  11. Jaclyn F. says:

    Great post

  12. Ron says:

    it’s nice to know that being wealthy and having an excellent credit score grants me the privilege to drive while impaired.

  13. Maurice Sonnek says:

    I just got my policy from the Hartford, and buried deep in it is the Notice regarding consumer reports, and I bet you can believe what I found, an excuse on why my rates are higher. I have an 835 credit score, no tickets or accidents, but they used this to come up with a reason to raise my rates.

    YOU HAD A BALANCE ON YOUR REVOLVING ACCOUNTS
    YOU APPLIED FOR CREDIT AT A FREQUENCY THAT RESULTS IN A HIGHER PRICE
    YOU OPENED MORE ACCOUNTS THAN IS OPTIMAL
    THE LENGTH OF YOUR CREDIT HISTORY DOES NOT SUPPORT A LOWER PREMIUM.

    My Wife and I are 56 years old, no kids at home. We have credit cards just like everyone else and the balance is a Comcast internet bill I receive every month, the others are zero. We bought a new car, that is the only new credit we have even had in years. What does opening more accounts than optimal even mean? Both of us have had a credit history since we were 18 or so, how old do I have to get to get that one taken off. In a nutshell we are being charged more because we have a credit history, and we are still upright.

  14. Chuck Weller says:

    Liberty Mutual assured us we would save much if we bundled home and auto, and they said we would save more if we stayed with them instead of jumping ship.

    Actual savings for bundling: 0.02% or about $4.00 on nearly $2000 total per year. And that includes $5000 deductible on the homeowners and $1000 on everything auto.

    I switched to State Farm only because the agent was a “friend” of mine but he is no longer since my rates increased past two years with no claims against us. One “accident” with another State Farm insured; totally her fault; she was ticketed and her license taken away, but they increased my rates even though both cars decreased in value each year. They said it was because costs of repairs have gone up. But that is not true according to another real friend who owns a very successful body shop. He says they redesigned bumper covers and other components so cost of repairs and replacements have gone way down.

  15. Ginny says:

    The cost of insurance is of course important to those of us who are not wealthy; but It’s not only the cost of insurance that is important, but the kind of service you get if you have to make a claim. I got great rates from Geico years ago, for about 15+ years, then my car was stolen one night and I had to make a claim. Treated me like I was a criminal. Older paid for Toyota, nothing suspicious. They couldn’t even be bothered to notify me when police in another jurisdiction recovered the car. Local detective, doing follow up contacted me to make sure everything was OK. That was how I found out my car had been found. Needless to say, I found other insurance ASAP. I would never go back to Geico.

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