Insurance Study Shows Non-Homeowners Pay Higher Car Insurance
Have you ever thought about what goes into your insurance premium or why your carrier charges you the rate it does? A recent study from the Consumer Federation of America (CFA) found that one significant factor affecting your car insurance is whether or not you own a home.
To gather its data, CFA requested quotes from major carriers across the country in 10 metro areas. Using a sample profile of a 30-year-old female driving a 2005 Honda Civic with no violations, CFA got two quotes from each carrier in each city.
They found that when all factors except for homeownership are identical, renters tend to pay seven percent more on average. However, the degree to which insurers charges increase varies greatly by location and by insurance carrier.
For instance, the largest disparity was with Farmer’s in Louisville; they charged their renters with identical profiles 47 percent more for basic liability coverage. By contrast, Allstate lowered premiums 11 percent for those who rented. Liberty Mutual tacked on an additional $307 for renters needing state mandated auto coverage.
However, some states and carriers try to make rates as equal as possible. Geico, for instance, didn’t appear to factor homeownership into its quotes at all. Also, the entire state of California prevents insurance carriers from taking other socioeconomic factors into account, including homeownership, when giving a quote.
Overall, CFA says this practice continues to place a higher price on low and moderate income Americans – those who make about $27,800 a year on average – compared to those in a higher income bracket. The difference ends up being a few hundred to a thousand dollars per year, depending upon the location and carrier.
“To raise people’s auto insurance premium because they can’t afford to buy their homes unfairly discriminates against lower-income drivers,” J. Robert Hunter, CFA’s Insurance Director and the former Insurance Commissioner of Texas, said in a statement to the press. “A good driver is a good driver whether he or she rents or owns a home. Insurance companies should not be allowed to target people based on homeownership status.”
Interested in seeing if you could get a lower auto insurance quote? To update your policy or to learn about more coverage options, give us a call today at 203.439.2815.
