Renters usually pay more for auto insurance coverage than homeowners.
If you're a low-income individual, more than likely you rent your home and don't own it. And if you're a good driver, obtaining affordable car insurance is more costly for renters, then for homeowners, a fact recently uncovered by the Consumer Federation of America (CFA).
Indeed, in a press statement released on Monday as well as in an accompanying press teleconference, two CFA representatives — Bob Hunter, Director of Insurance and Doug Heller, Insurance Consultant — articulated just how much more the renting poor pay for their auto insurance.
CFA research was conducted to determine what those differences might be, finding that renters pay 7 percent per year more on …show more content…
Other factors may include an individual's credit score, zip code, the type of vehicle driven, and driving record.
Renters already carry a burden when it comes to their finances. According to 2013 Federal Reserve Bank data, the average annual income for renters in the US was $27,800 compared with $63,400 for homeowners.
"To raise people's auto insurance premium because they can't afford to buy their homes unfairly discriminates against lower-income drivers," said J. Robert Hunter, CFA's Insurance Director and the former Insurance Commissioner of Texas. "A good driver is a good driver whether she rents or owns her home. Insurance companies should not be allowed to target people based on homeownership status."
The CFA surveyed minimum limits liability coverage in 10 cities scattered across the United States and chose the seven largest insurers for their analysis. The seven insurers were: State Farm, Geico, Allstate, Progressive, Farmers, Liberty Mutual, and Nationwide.
To determine the insurance rate, the CFA utilized each company's website to acquire two premiums in each city for a 30-year-old female motorist with a perfect driving record and a 2005 Honda Civic to insure. Both premium inquiries were identical, save for one category — whether the person rented her home or owned …show more content…
The organization also checked rates in an eleventh city, Oakland, California, confirming that auto insurance rates for homeowners and renters were the same. That's because California law prohibits insurers from setting rates based on home ownership, something the CFA would like to see the other states follow.
"Using customers' homeownership status to determine premiums is another way in which insurance companies are piling on lower-income Americans," said Douglas Heller, a consumer advocate who worked with CFA's Michelle Styczynski to analyze the data in the study released today. "With all these different rating factors that have nothing to do with driving, auto insurers are charging good drivers hundreds and sometimes even thousands of dollars extra just for being poor."
Hunter concluded that while people have a choice whether to own or rent a home, they aren't given that choice when it comes to car insurance. "State Insurance Commissioners and elected representatives should step in and stop this practice," said
If you're a low-income individual, more than likely you rent your home and don't own it. And if you're a good driver, obtaining affordable car insurance is more costly for renters, then for homeowners, a fact recently uncovered by the Consumer Federation of America (CFA).
Indeed, in a press statement released on Monday as well as in an accompanying press teleconference, two CFA representatives — Bob Hunter, Director of Insurance and Doug Heller, Insurance Consultant — articulated just how much more the renting poor pay for their auto insurance.
CFA research was conducted to determine what those differences might be, finding that renters pay 7 percent per year more on …show more content…
Other factors may include an individual's credit score, zip code, the type of vehicle driven, and driving record.
Renters already carry a burden when it comes to their finances. According to 2013 Federal Reserve Bank data, the average annual income for renters in the US was $27,800 compared with $63,400 for homeowners.
"To raise people's auto insurance premium because they can't afford to buy their homes unfairly discriminates against lower-income drivers," said J. Robert Hunter, CFA's Insurance Director and the former Insurance Commissioner of Texas. "A good driver is a good driver whether she rents or owns her home. Insurance companies should not be allowed to target people based on homeownership status."
The CFA surveyed minimum limits liability coverage in 10 cities scattered across the United States and chose the seven largest insurers for their analysis. The seven insurers were: State Farm, Geico, Allstate, Progressive, Farmers, Liberty Mutual, and Nationwide.
To determine the insurance rate, the CFA utilized each company's website to acquire two premiums in each city for a 30-year-old female motorist with a perfect driving record and a 2005 Honda Civic to insure. Both premium inquiries were identical, save for one category — whether the person rented her home or owned …show more content…
The organization also checked rates in an eleventh city, Oakland, California, confirming that auto insurance rates for homeowners and renters were the same. That's because California law prohibits insurers from setting rates based on home ownership, something the CFA would like to see the other states follow.
"Using customers' homeownership status to determine premiums is another way in which insurance companies are piling on lower-income Americans," said Douglas Heller, a consumer advocate who worked with CFA's Michelle Styczynski to analyze the data in the study released today. "With all these different rating factors that have nothing to do with driving, auto insurers are charging good drivers hundreds and sometimes even thousands of dollars extra just for being poor."
Hunter concluded that while people have a choice whether to own or rent a home, they aren't given that choice when it comes to car insurance. "State Insurance Commissioners and elected representatives should step in and stop this practice," said