Why Driving Fewer Miles May Not Lead to Lower Auto Premiums
- 6 years ago
Why Driving Fewer Miles May Not Lead to Lower Auto Premiums
“By using a variety of rating factors, insurers are able to develop a more complete picture of
a driver’s potential for filing a claim and in this way more accurately price the policy.”
As the report itself says, insurers do consider mileage driven as a factor, the association said,
but “as one would expect in a competitive market, it is done so differently among insurers.”
Some insurers, the report noted, have said they don’t emphasize mileage in setting rates because customers often wrongly estimate how much they drive.
The Property Casualty Insurers Association said in a statement
that the federation’s latest report was “flawed” and showed a “fundamental misunderstanding of auto insurance underwriting and rating.”
Insurers use multiple factors that have proved to be effective in predicting
the likelihood of someone filing an insurance claim, the association said.
(The cities tested were Atlanta; Baltimore; Boston; Charlotte, N. C.; Chicago; Cleveland;
Houston; Los Angeles; Minneapolis; Oklahoma City; Rochester; and Tampa, Fla.)
The report found that outside California, given drivers with similar characteristics, Progressive
and Farmers usually quote the same rates to someone who drives just 2,500 miles a year that they do someone who drives 22,500 a year.
“By using a variety of rating factors, insurers are able to develop a more complete picture of
a driver’s potential for filing a claim and in this way more accurately price the policy.”
As the report itself says, insurers do consider mileage driven as a factor, the association said,
but “as one would expect in a competitive market, it is done so differently among insurers.”
Some insurers, the report noted, have said they don’t emphasize mileage in setting rates because customers often wrongly estimate how much they drive.
The Property Casualty Insurers Association said in a statement
that the federation’s latest report was “flawed” and showed a “fundamental misunderstanding of auto insurance underwriting and rating.”
Insurers use multiple factors that have proved to be effective in predicting
the likelihood of someone filing an insurance claim, the association said.
(The cities tested were Atlanta; Baltimore; Boston; Charlotte, N. C.; Chicago; Cleveland;
Houston; Los Angeles; Minneapolis; Oklahoma City; Rochester; and Tampa, Fla.)
The report found that outside California, given drivers with similar characteristics, Progressive
and Farmers usually quote the same rates to someone who drives just 2,500 miles a year that they do someone who drives 22,500 a year.