The Truth About Auto Insurance | Auto Insurance Quote | Part I

The Truth About Auto Insurance The way in which insurers set their prices is surrounded by a halo of mystery and plagued with injustices. We studied more than two thousand million quoted prices to understand the factors that increase the rates. Here you say what you must do to keep it yours low.


You know Flo. It is the promoter of white apron with a bobalicón charm that tells you that you can save more than $500 if you change Progressive auto insurance. Or you can get other discounts if you do a package with your insurance or name your own price that fits your budget.


From the ads, you can get to the reasonable conclusion that you are to pretty enticing savings. But Consumer Reports compared to 5 national insurance companies would charge them to typical adult drivers in States where all leading. And we found that Progressive was in fact the second most expensive company, on average, with a premium $597 more expensive than the cheapest of USAA.

Deny it, Flo!


Progressive is not for nothing the only one that claims to have discounts that end up turning out to be not so appealing as they sound. In fact, the relaxed reptile from the Geico ads is so well known that people can simply recite his slogan: "15 minutes can save you 15%".


"The ads create the impression that there is competition between the prices, when in reality it is not so," says Doug Heller, a consumer advocate and consultant to California insurance.


Without a doubt, the predominance of skilled commercial auto insurance disguises broader and more problematic industry practices that give rise to the lack of transparency and lack of Justice in the pricing of insurance policies. As a result, costs consumers distinguish between a good deal and a bad deal. And in the absence of information reliable and independent consumers they have only succumb to the hype.


Consumer Reports believes that knowing the rate of market for any product or service is a fundamental consumer right. For this reason, we embarked on a comprehensive project for two years, in which we analyze more than 2 billion price of over 700 companies from auto insurance quotes with the most out of 33,419 General U.S. postal codes. See "How our analysis was carried out" more later.


What we found is that behind the rates quotes is a process of pricing that you judged less by your driving habits and increasingly by socio-economic factors. These factors include your credit history, if you use credit cards of large stores or banks, and to your TV service provider. These measurements are used then in confidential algorithms, and often confusing, score. And thanks to the massive data available, companies have much more information that dig.



You have the legal obligation to take out car insurance if you want to handle (except New Hampshire); Even so, the business strives to hide critical information to customers. "Transparency in prices is probably the most powerful tools of saving the consumer when it comes to car insurance can have", says Norma Garcia, lawyer senior and program manager of financial services by Consumers Union, Consumer Reports defense division, who is fighting for the auto insurance protection since the 1980's.


The industry is regulated at the State level and therefore pricing is scattered across the map. "This involves bringing the fight to regulators of insurance and State legislators," says Garcia. Some States tried to maintain a market fair to require insurance companies that present their formulas for pricing before regulators, that they would take care to ensure that the prices were not excessive nor discriminatory.


But in the last 15 years, insurers made that pricing is considerably more complicated and confusing. As result, "there is a complete lack of transparency", says Birny Birnbaum, executive director of the Center for economic justice in Texas. These new models of score, although hidden to the public, are at the disposal of regulators with the condition to maintain its confidentiality. But due to its high degree of complexity, "regulators not saved nor hope to supervisarlosa background," says Birnbaum.


It is time for the auto insurance industry make us a better offer. Our research sheds light on some of the worst practices by demonstrating the actual cost to consumers in dollars and cents. We also highlight companies offering fair offers and help you stay away from the insurance companies whose numbers simply don't add up.


But the most important thing is that we want to join forces with you to require insurers and regulators who have the task of controlling them on our behalf, to adopt practices of pricing which are clear and significant way to the way in which you drive, and they don't think who you are. You are looking for information about how to work with us later.
The hidden truth #1


Your credit score and not your driving habits can determine your premium. Your score is used to measure your solvency, the probability that you return a loan or pay the debt of credit card. But perhaps do not know that the insurance companies also are reviewing with magnifying glass your credit records to do something completely different: predict the probabilities that you make a claim. And if you believe that your credit does not reach its highest standard, you will be charged more, even if you never had an accident, depending on what show our price data.


Subjectively selected around 30 of nearly 130 elements of a credit report, each insurer creates a score of exclusive property that differs greatly from the score FICO probably you know, so you can not use one to guess the other reliably.

The Truth About Auto Insurance | Auto Insurance Quote | Part II

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