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Posted On 10.22.14 by in Blog
A recent national consumer survey found that a majority of the driving American public rejects the use of educational and occupational background as a basis for Auto Insurance Rates. The Consumer Federation of America (CFA) made their findings public recently and it showed that some of the major auto insurers in the country are using algorithms which include education levels and occupations as a basis for setting their premiums.
“Auto insurers charge high premiums for minimal coverage to most working people, even those with perfect driving records, who live in urban areas,”. Stephen Brobeck, CFA’s Executive Director.
These finding are disturbing to most Americans who feel that these practices of auto insurers are discriminatory, just as setting insurance rates based on race would be discriminatory. In light of the fact that every state requires auto insurance coverage, those with lower incomes and higher rates have a difficult choice to make; drive without coverage or leave the keys to the car at home.
When calculating rates, the auto insurance industry should take into account many factors that do correlate to the risk they take in offering to insure individual drivers. Driving experience and driving history such as tickets and accidents, these are the relevant factors in determining the business of insurance rates for drivers. Many states allow for credit and legal history as a factor as well, although there are some studies which dispute the relationship to claims risk and credit history and some which fail to show how the consumer is benefited by such practices. http://www.naic.org/topics/topic_credit_scoring.htm Therefore, it stands to reason that educational levels and occupation do not directly reflect this risk that insurance companies tout. Many consumer advocates are berating insurance carriers for this practice as it unfairly places a financial hardship on those who need the insurance coverage the most. When enough of the governmental regulatory agencies investigate these further there will surely be adjustments to this practice that is tantamount to discrimination.
As a consumer, you are in a position to shop for better rates for this mandatory coverage. Here are a few things that you can do to possibly get better rates from some of the best carriers.
Remember that most insurance companies do not notify you when you are entitled to a discount or better coverage than you currently have. It is your responsibility to seek out the best insurer and the best coverage for your particular situation.
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