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The problem with car insurance premiums

Auto insurance prices should be based mainly on your driving, not your credit score or shopping habits

Published: July 31, 2015 04:00 PM

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In its new investigation, "The Truth About Car Insurance," Consumer Reports takes a hard look at auto insurance and the ways companies determine car insurance premiums. We conducted research for two years in which we analyzed more than 2 billion car insurance price quotes from more than 700 companies.

Our investigation found that your credit score—more than your driving record—can determine your car insurance premiums. Other factors unrelated to your driving, such as shopping habits and how likely you are to tolerate rate hikes, can also play a role in what you pay. Many consumers don’t know that insurers are judging them less on their driving and increasingly on socioeconomic factors.

Our analysis of car insurance premiums for eight hypothetical single drivers of varying ages found those individuals who had a good credit score paid $68 to $526 more than similar drivers with a higher score, depending on which state they called home. In one example, in Florida, our group of adult single drivers with a clean driving record and poor credit paid $1,552 more on average than if the exact same drivers had excellent credit and a drunk driving conviction.

Should your credit score affect your car insurance premiums?

Tell us what you think by adding a comment below.

We believe that’s unfair. You have a right to know the going rate of any product or service you buy, and you have a right to expect your car insurance premiums are based on meaningful behavior.

The way insurers set prices today is shrouded in secrecy and rife with inequities.  We want to change that, and we need your help.

Working together, we can pressure the policymakers to reform the system and help ensure you get a fair price for your car insurance premiums.

This feature is part of a regular series by Consumers Union, the policy and advocacy arm of Consumer Reports. The nonprofit organization advocates for product safety, financial reform, safer food, health reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.

Read past installments of our Policy & Action feature.






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