Study finds innocent drives penalized

Date: 13 FEB 2017posted by Car Rentaledited by WinX

It makes sense that if you get into a car accident and are at fault, the cost of your auto insurance premium should go up. It goes up when you are at fault because you are now more likely to get into another accident in comparison to a person that may never had an accident before. Just like how discounts work with auto insurance, if you are less likely to get into accidents then your annual premium should cost less because you're a safe driver. Even if the fault was split even 50/50 between the drivers in an accident, it does make sense to see a hike in your premium because the same logic still applies. Unfortunately, that is not how the real world works for some of the top auto insurance companies in the US.

According to a new study released by the Consumer Federation of America (CFA) on Monday, four out of five of the leading auto insurers charge their customers in 48 states more after an accident, even if the driver were not at fault. The only two states that were exempt in the price hike was California and Oklahoma which have laws that prevent raising rates when an accident is someone else's fault. The report which surveyed and analyzed insurance quotes from the five biggest insurance companies in 10 cities found premiums increased an average of about $300 a year even if you were involved in accident where you had no fault. The worst offender was Progressive leading at 16.6% price increase on premiums for not at fault drivers, when it was not illegal to do so. Followed by GEICO at 14.1%, Farmers at 11.1% and Allstate at 4.8%. The only company that did not charge innocent drivers a higher premium was State Farm.

The CFA called on lawmakers to follow in California and Oklahoma's foot steps to prohibit such unfair penalties on innocent drivers. J. Robert Hunter, CFA's Director of Insurance and the former Insurance Commissioner of Texas said "penalizing safe drivers hit by another car is not only very unfair; it also discourages them from filing legitimate claims." "Lawmakers and regulators need to protect consumers from being punishes when they've done nothing more than use the policy they have already paid for."

The study also found that the insurers punishes innocent drivers differently according to their socio-economic circumstances, in other terms, their net worth and where they lived. The study found that people who were more likely to be less wealthy to be punished more harshly than people that were more likely to be well off.

  • Higher income drivers paid $78 more on average after a not-at fault accident
  • Moderate income drivers paid $208 more on average after a not-at fault accident
  • Higher income faced a 6.6 penalty on average after a not-at fault accident
  • Moderate income drivers faced 9.6% penalty on average after a not-at fault accident

In the tests, average insurance premium hikes were the highest in New York city at $401 and the lowest in Atlanta at $60.

Mark Kulda, a spokesperson for the Insurance Federation of Minnesota, said a hike rate might occur for an innocent driver hit by someone without insurance. "Then your own coverage might have to pay the claim and if it does then you are subject to potentially being surcharged." That is absolutely ridiculous. The whole point of buying insurance is so you are protected if there was an accident. Not only is that a poor justification of raising premiums, that is a absolute joke. Then why buy insurance? If someone can get away without buying insurance, and have the other person's insurance cover the accident, then why would anyone buy insurance in the first place. It is my opinion, that if you are not using State Farm, it is time to switch to them. The beautiful part of consumerism is that only the best will survive, and when State Farm in the only top insurance company that doesn't try to milk their customers, they're your best bet.

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