Factors Unrelated to Driving Can Affect Car Insurance - New York Times

Photo

Online quotes from most insurers are almost always higher for single, separated and divorced drivers than they are for married drivers. Credit Todd Heisler/The New York Times

ARE you married or single? Have you been widowed or divorced? Is your credit history less than stellar? Your answers to those questions can affect the rates you pay for car insurance.

Your driving record and habits factor into your premiums, of course. But many insurers also use a variety of other data, like your marital status and a version of your credit score, to set your rate.

An analysis by the Consumer Federation of America found that online quotes from most companies were almost always higher for single, separated and divorced drivers than for married drivers. Notably, the study found that quotes for annual premiums for a young woman were an average of 14 percent higher if she was a widow, rather than married.

Stephen Brobeck, the federation’s executive director, and another researcher examined quotes from six major insurers in 10 American cities based on a hypothetical 30-year-old single woman. (Differences in marital status probably hold for single men as well, Mr. Brobeck said.)

For the analysis, the researchers obtained premium quotes from the auto insurers’ websites for the minimum liability coverage required by states. (All states but New Hampshire require liability coverage.) In seeking quotes, the study varied the driver’s marital status while keeping other characteristics constant. The test driver had no accidents or moving violations, held a high school diploma, worked as a bank teller and rented in a ZIP code with median household income of $30,000.

Average quotes for a widowed driver obtained from five insurers â€" Geico, Farmers, Progressive, Nationwide and Liberty Mutual â€" were higher than for a married driver, ranging from 3 percent more (Nationwide) to 29 percent more (Geico). State Farm was the only insurer that did not quote higher premiums for a widow in any of the markets. The company’s quotes in a given city were the same, regardless of the driver’s marital status.

Eric Hardgrove, a spokesman for Nationwide, said in an email statement that a number of factors affected a customer’s price. “Nationwide doesn’t have different prices based solely on whether a driver is widowed or married,” he said.

He said that significant life events like a marriage or a death in the family “warrant a conversation with an insurance professional who can determine an individual’s specific insurance needs and advise on the appropriate coverage at the right price.”

Geico did not immediately return emails and a phone message seeking comment.

David Snyder, a spokesman for the Property Casualty Insurers Association of America, said that rather than showing a penalty applied to widows or other unmarried people, the analysis reflected that many insurers gave a discounted premium to married couples, because they tended to be more responsible and had a lower rate of filing claims. So if drivers are not married, they will not receive a quote with that discount.

Also, Mr. Snyder said, punching information into a website to get a quote doesn’t reflect what occurs with actual customers. If a customer becomes widowed and later receives a premium increase, she can call her agent and explain that her spouse has died. “I don’t think there’s an agent out there that wouldn’t adjust the rate,” he said.

Consumer Reports recently published an analysis that examined two billion insurance price quotes from 700 insurers and concluded that factors that don’t have to do with driving â€" like your credit history and whether you use store or bank credit cards â€" are increasingly used as criteria in setting rates. A single New Yorker, for instance, with merely “good” credit would pay an average of $255 more in annual premiums than someone with “excellent” credit, the analysis found.

Mr. Snyder again said that insurers were basing their premium decisions on data that indicated higher risk: “It’s not people being judged,” he said. Rather, he said, “certain factors correlate to increased risk.”

Mr. Brobeck argues that because auto insurance is state-mandated, insurance companies should be more transparent about how they set rates and should stick primarily to driving-related factors to set premiums. He cited as an example California, which has mandated that driving-related factors must be the primary criteria used to set premiums. (Three states, California, Hawaii and Massachusetts, prohibit insurers from using credit scores to set insurance rates.)

Here are some questions to consider asking about auto insurance rates:

â–  How can I increase my chances of getting a good auto rate?

Because information in your credit report can affect your premium, you should check your report for possible errors and seek to have them corrected, said Margot Gilman, money editor at Consumer Reports. Using national bank credit cards rather than store-specific cards may help, she said, because insurers rank bank cards more highly. And, she said, if you receive notice of a rate increase, push back by contacting your insurer and asking for a lower premium.

â–  Do I have recourse if my credit score harmed my premium?

Many states allow consumers to ask their insurer for an “extraordinary life circumstances” exception, which would eliminate the use of their credit score as a factor in setting their premium if they are affected by a job loss, illness or other serious life event. Consumer Reports suggests seeking an exception, although it’s unclear how often such requests are granted.

â–  Does it still make sense to shop around for insurance rates?

Yes, said Ms. Gilman. But checking one or two different insurers isn’t enough. Most consumers check three insurers at the most, she said, “and falsely convince themselves that they’ve shopped around.” To get the best premium, she said, you should check rates “broadly and frequently” â€" and that means up to a dozen quotes. “It’s a pain in the neck,” she said. “But it’s worth it.”