WASHINGTON – Feb. 17, 2016 – Major auto insurance companies charge good drivers as much as 47 percent more for basic liability auto insurance if they don’t own their home, according to a new analysis of premiums by the nonprofit Consumer Federation of America (CFA)
Based on a sampling of insurance quotes across the country for a 30-year old safe driver, CFA found that premiums averaged seven percent higher – about $112 per year – for people who rent rather than own. Liberty Mutual penalized renters most with an average higher premium of $307 per year (19 percent).
CFA criticizes the higher auto rate charged to renters, noting that many are low- and moderate-income Americans. According to Federal Reserve Board, the median income of renters in the U.S. was $27,800 in 2013 compared with $63,400 for homeowners.
“A good driver is a good driver whether she rents or owns her home,” says J. Robert Hunter, CFA’s insurance director.
For the analysis, CFA tested rates for minimum limits liability coverage in 10 cities from the nation’s largest insurers – State Farm, Geico, Allstate, Progressive, Farmers, Liberty Mutual and Nationwide. It solicited premiums through company websites in each city for a 30-year old female motorist with a perfect driving record and a 2005 Honda Civic. The only characteristic altered during the testing was whether she owned or rented her home.
CFA says the rate varied noticeably depending on the insurance company.
“For example, Allstate charged renters in Tampa 19 percent more than it charged homeowners; Liberty Mutual charged Baltimore renters 23 percent more and 26 percent more in Newark; and Farmers Insurance charged renters in Louisville 47 percent more ($768) than homeowners for a basic auto insurance policy,” according to CFA.
Geico was the only company that did not consider homeownership status.
The only premium decrease for renters was in Chicago, where Allstate lowered rates by 11 percent for renters compared with premiums charged to homeowners.