A recent study conducted by the Consumer Federation of America shows a wide gap in insurance rates between married drivers and those who are single, divorced, or widowed. What this boils down to is if you fall into any of these categories, you’ll pay up to 29% more in car insurance premiums.
The CFA is crying “foul!” and says these rate increases are arbitrary and discriminatory against single drivers. When all is said and done, major insurance companies such as Geico, Farmers, Progressive, Liberty, and Nationwide have little to say in defending themselves regarding these pricing policies.
But what is really going on here? What is at the heart of these rate increases and is there a logical reason why single drivers are getting the shaft when it comes to car insurance rates?
The Bottom LineThe CFA did some number crunching, and discovered that the following increases in insurance rates for widowed drivers, when compared to married drivers, was as follows:
Geico –
24% moreFarmers –
22% moreProgressive –
19% moreLiberty –
8% moreNationwide –
3% moreState Farm –
No increase; 0%Singles Suffer Bigger RatesThe study conducted by CFA said that the age of the driver did not appear to factor much into insurance rates if they were married. So a younger married driver basically had the same rates as older married drivers.
For instance, a married driver could get a quote from Geico of $650 per year in Louisville, but if the driver was widowed, the quote would skyrocket to $1,302 per year. The news gets worse; if the driver was listed as separated, the premium would jump higher to $1,864 per year.
However, this increase in car insurance rates is not across the board throughout the nation. In Oakland, CA, for instance, Geico quotes $388 per married individual, as opposed to $478 for a single, non-married individual.
But generally speaking, it seems that married drivers definitely have lower rates than those who aren’t.
What’s Going On?Insurance companies believe that married drivers are safer drivers and are more responsible at the wheel, as opposed to single drivers that get into more car accidents. On the surface this may sound reasonable.
If a class of individuals gets into more accidents, they will pay a higher premium to offset the cost of those who do get into accidents.
But this reasoning by insurance companies was apparently based on a car accident injury study conducted in 2004, accuses the CFA, which shows that single drivers were more likely to get into car accidents than married ones. What was this astounding figure that insurance companies supposedly base their higher rates on? There was only a 1 percent difference between the two groups.
Statistically speaking, 1% is within the margin of error for many studies, or in other words, the numbers have an accuracy of about plus or minus 1%. This study can basically be seen as a draw between married drivers and single drivers when it comes to safe driving habits.
What Now?The Insurance Information Institute dismisses the CFA study and states that their information is flawed.
James Lynch, the Insurance Information Institute's chief analyst for financial management risk said:
"The insurers rely on their own internal data; they do not rely on a 2004 study. The discount for married couples has existed for decades, and it's a little surprising that at this late date the Consumer Federation of America takes the opportunity to say there's something wrong with this."
With that said, it doesn’t address the real issue: are the higher rates for single drivers really justified and based on legitimate driving data?
Source:
Yahoo Autos