NEW YORK (MainStreet) If you are paying more than $500 in annual premiums for car insurance, you're paying too much. So says the Consumer Federation of America (CFA) and more than three quarters (76%) of Americans agree, according to a national survey conducted for the organization. The CFA says annual premiums for basic car insurance coverage for low- and moderate-income drivers with excellent driving records should not exceed $500.
However, the consumer advocacy group claims auto insurance companies continue to price their policies based on occupation, education and credit scores rather than driving records, pushing the cost of premiums out of the reach of many good but low- or moderate-income drivers.
The CFA joined with over 30 consumer, civil rights, community and other public interest groups in writing a response to the U.S. Treasury Department's Federal Insurance Office (FIO) request for information and comment regarding affordable auto insurance.
The groups made three recommendations:
- Data collected on auto insurance should be precise enough to indicate the actual premiums insurers charge drivers, rather than average rates that obscure the wide range of premiums that companies charge to good drivers with different socio-economic characteristics
- An affordability metric should consider both the public's views on reasonable prices and programmatic efforts to make auto insurance affordable for low-income drivers
- The FIO should work with regulators and, as necessary, use its own authority to collect data directly from insurance companies in order to ensure the most accurate information is available.