Friday
July 29, 2016

Save Money on Car Insurance: Own a Home

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Save Money on Car Insurance: Own a Home

A new study finds that auto insurance is higher for renters than home owners. A study by the nonprofit Consumer Federation of America finds that major auto insurance companies charge good drivers up to 47 percent more for basic liability auto insurance if they don’t own a home.

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Premiums averaged 7 percent higher — about $112 more per year — for drivers who are renters than home owners, the CFA found.

The CFA argues that the use of home ownership status by auto insurance companies burdens low- and moderate-income good drivers.

“To raise people’s auto insurance premium because they can’t afford to buy their homes unfairly discriminates against lower-income drivers,” says J. Robert Hunter, the CFA’s insurance director and the former insurance commissioner of Texas. “A good driver is a good driver whether he or she rents or owns a home. Insurance companies should not be allowed to target people based on home ownership status.”

The CFA’s study analyzed rates for minimum limits in liability coverage in 10 cities from the nation’s largest insurance companies.

Researchers found differences among the cities examined. For example, in Louisville, renters were charged 47 percent, or an additional $768, more than home owners for a basic auto insurance policy by Farmers Insurance. On the other hand, in Oakland, Calif., all companies charged the same premium to good drivers, whether they were renters or home owners. That is because California has consumer protection laws that prevent auto insurance companies from weighing a person’s home ownership status or other socioeconomic factors when setting premiums. Instead, the driving safety record, annual mileage, and years of driving experience must be factored in.

“Virtually every state requires drivers to buy insurance, but we shouldn’t force them to buy a home in order to get the best price,” says Douglas Heller, a consumer advocate who worked with the CFA to analyze the study’s data.

Source: Consumer Federation of America