Our exclusive data analysis of more than 2 billion car insurance price quotes across every U.S. ZIP code exposes what insurers don’t want you to know: That how well you drive may have little to do with how much you pay

Published: July 30, 2015

You know Flo. She’s the white-aproned pitchwoman with the goofy charm who says that you can save more than $500 by switching to Progressive car insurance. Or you might get other discounts by bundling your insurance together or by naming your own price to fit your budget.

You might reasonably conclude from the ads that you’re in for some pretty sweet savings. But Consumer Reports compared what five national insurers would charge sample adult drivers in states where they are all market leaders. And we found that Progressive was actually the second most expensive, on average, with an annual premium that was $597 higher than the lowest, from USAA.

Say it ain't so, Flo!

What’s the big secret?

Consumer Reports believes that knowledge about the going rate for any product or service is a fundamental consumer right. That’s why we embarked on a comprehensive project spanning two years, in which we analyzed more than 2 billion car insurance price quotes from more than 700 companies with the greatest share of customers in all 33,419 general U.S. ZIP codes.

What we found is that behind the rate quotes is a pricing process that judges you less on driving habits and increasingly on socioeconomic factors. These include your credit history, whether you use department-store or bank credit cards, and even your TV provider. Those measures are then used in confidential and often confounding scoring algorithms. And thanks to the availability of Big Data, companies have a lot more information to dig into.

You’re legally obligated to buy car insurance if you want to drive (except in New Hampshire), yet the business thrives on withholding critical information from customers. “Pricing transparency is one of the most powerful money-saving tools consumers can have when it comes to car insurance,” says Norma Garcia, senior attorney and manager of the financial services program at Consumers Union, the policy and advocacy arm of Consumer Reports, which has fought for car insurance protections since the 1980s.

Which Insurers Charge More or Less?

Complexity and lack of transparency in car insurance pricing keep consumers from knowing which car insurer charges a lot and which one charges a little. Here's how five big national insurers stacked up for male and female single drivers in our study.

Progressive $1,414
Geico $1,177
State farm $1,147
USAA $817

New-customer rate for eight male and female single drivers ages 25, 35, 65, and 75 with excellent credit and clean driving record in AK, AL, AR, AZ, CO, CT, DE, FL, GA, HI, KY, LA, ME, NH, NM, NV, NY, SC, TN, TX, UT, VA, and WA, the states where all five companies are market leaders.

It’s time for truth in car insurance

The industry is regulated at the state level, which is why pricing is literally all over the map. “That means bringing the fight to the state insurance regulators and lawmakers,” Garcia says. Some states tried to keep the marketplace fair by requiring insurers to file their pricing formulas with regulators, who would then ensure that prices weren’t excessive or discriminatory.

But over the past 15 years, insurers have made pricing considerably more complicated and confusing. As a result, “there is a complete lack of transparency,” says Birny Birnbaum, executive director of the Center for Economic Justice in Texas. Those new scoring models—though hidden from the public—are available to regulators on the condition they remain confidential. But because they’re so complex, “the regulators don’t have a prayer of being able to monitor them deeply,” Birnbaum says.

It’s about time we got a better deal from the car insurance industry. Our investigation illuminates some of the worst practices by demonstrating the real cost to consumers in dollars and cents. We also highlight the companies that are offering fair deals, and we help you steer clear of insurers whose numbers just don’t add up. But most important, we want you to join forces with us to demand that insurers—and the regulators charged with watching them on our behalf—adopt price-setting practices that are more meaningfully tethered to how you drive, not to who they think you are.

Read our buying guide to choose the best car insurance for you!

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  • Illustration by James Gilleard

    We started by creating 20 example driver policies

    The consistent models allowed us to equally compare the exact same example consumer at different insurance companies all over the United States.

  • We put our drivers behind the wheel of popular vehicles

    For one-vehicle policies, we assumed our drivers owned a popular car, the Toyota Camry LE. For two-vehicle policyholders, the second car was a Honda Accord LX.

  • We gathered prices from 8 to 19 car insurers in each state covering all U.S. ZIP codes

    We focused on price quotes from “preferred” companies, which write most car insurance for drivers with clean driving records.

  • Our baseline sample drivers had a standard profile with key traits such as:

    Perfect driving records, excellent credit scores, loyalty to the same company for 15 years, drove 13,000 miles per year.

  • We then changed our baseline drivers’ traits, one at a time, to learn how the premiums changed

    That allowed us to isolate the negative or positive impact of each factor in dollars.

  • We requested this coverage for our baseline drivers

    Standard liability coverage: a limit of $100,000 for bodily injury (BI) per person, $300,000 for BI per accident, and $100,000 for property damage. They also bought uninsured/underinsured motorist protection for the same amount, and collision, comprehensive, and Med Pay or personal injury protection.