Smart Auto Insurance Blog

There has been some concern that the 8 million Toyota cars and trucks that have been recalled may affect auto insurance rates.  But industry experts are saying this is not the case.  The article “Factors Influencing Auto Insurance Rates” by The Associated Press on ABCNews.com discusses the specific factors that do affect auto insurance prices.

These factors include driving record, miles driven, where you live, the type of car you drive, credit history, and the type of coverage you choose.  The article points out that the larger the policy the more expensive your auto insurance quote will be.  Some auto insurance companies offer discounts if you have your homeowners insurance and auto insurance under one policy.

Auto insurance rates also vary greatly from company to company and it’s encouraged to compare auto insurance quotes.  You can use online programs to get many quotes at once to save you a lot of time and ultimately save you money.

There is some concern for those with Massachusetts auto insurance, that insurers may be able to use credit scores and profession when determining one’s auto insurance rates.  According to Jon Chesto’s article “Auto Insurance Agents Push for Ban on Using Socioeconomic Factors” on tauntongazette.com, many other states use credit scores as an auto insurance rate factor. 

The article also discusses the debate going on now between insurers and consumers.  President of the Massachusetts Association of Insurance Agents, Frank Mancini, is worried that the ban to use credit scores might not survive through the next commissioner.  Because of this, his organization testified at the State House in favor of a movement that would ban the use of these certain factors as state law.

The Massachusetts Association of Insurance Agents believe that insurance rates should only be based on driving record, location, and how long someone has been driving.  This is how it worked under Massachusetts previous, highly regulated auto insurance system.  Most states allow factors such as education, credit scores and occupation when insurers calculate an auto insurance quote, and many feel this is unfair to consumers.

It has been a common practice of auto insurance companies to use location as a factor in determining auto insurance rates.  According to the article “Proposal would eliminate ZIP codes as factor in Wisconsin car insurance rates” by Paul Gores of the Journal Sentinel, WI state legislature wants auto insurance companies to stop using zip codes.

Some of the Democratic legislators have brought this plan back despite a similar plan being vetoed by Gov. Jim Doyle back in June.  Auto insurance rates can be up to 60% higher in areas that are heavily populated.  This may seem unfair for those living in urban areas, but the auto insurance companies claim it is part of mitigating risk.  The current system gives higher rates to those in bigger cities because more theft, accidents and vandalism generally occurs in these areas.

The auto insurance companies also point out that if zip code was not allowed to be a factor, rates would increase substantially for those living in rural areas.  There would simply be an overall redistribution of premiums.  Auto insurance companies look at many different factors including driving record and credit score.  The Governor will have to review this bill and see if it will be considered.