Drivers who earn less are paying higher premiums for the same insurance as drivers who make more money.
A recent study has shown that drivers who earn less are paying a higher amount for the same insurance as drivers who make more money, despite having similar records. This study is based on data collected from hypothetical drivers in 15 cities. Five major insurance companies were selected – Farmers, State Farm, Progressive, Allstate, and Geico. Researchers used a hypothetical married couple. Both were employed in white collar jobs, owned a home, and maintained auto insurance for the past six months. Researchers also obtained insurance quotes for a single male and female, who worked blue collar jobs, rented their homes, had not previously owned a car for six months or had auto insurance.
Significant Price Differences
The driving records of the drivers in the study were identical but the insurance quotes provided to the drivers varied by over 59 percent. The blue collar workers faced higher insurance premiums compared to their white collar counterparts. The researchers also noted that some companies failed to provide insurance quotes to the blue collar drivers and others offered only quotes from a high risk affiliated company.
Price variation was significant between companies and from one city to another. This raises a serious question about whether or not consumers are paying a fair price for insurance. All drivers in Illinois are required to carry insurance that meets or exceeds minimum standards set by the state of Illinois. However, there are various companies that offer minimal coverage policies but this coverage is often inadequate in the event of a car accident.
Research Before Purchasing Auto Insurance
Carefully research before purchasing an auto insurance policy and seek several quotes from different companies. This is important, because it allows you to choose a policy that provides adequate coverage at a reasonable price. It also allows you to consider additional optional coverage, including coverage for rental vehicles and collisions.
Do not purchase insurance based on price alone. Companies that have poor reputations and offer cheap policies will not give you adequate protection against car accident-related losses. Choose a policy that provides adequate coverage in the event of a crash and choose an insurance company with a good reputation.