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Online auto rates high and wide

By Jay MacDonald · Bankrate.com
Tuesday, July 3, 2012
Posted: 10 am ET

Are you getting the best rate when shopping for auto insurance online? Or are auto insurance companies hoping you'll snap at their first offer, no matter how outrageous?

Wonder no more.

In a recent study, the Consumer Federation of America sought online quotes for minimum liability coverage from the nation's four largest auto insurers – Allstate, GEICO, Progressive and State Farm. The CFA used good drivers with no accidents or moving violations who live in moderate-income neighborhoods in 15 different cities as their study sample.

Their findings were discouraging to say the least.

The CFA found that most drivers were quoted high auto rates for state minimum liability coverage. How high is high? More than half (56 percent) were quoted rates in excess of $1,000 per year for two moderate-income drivers, and nearly a third (32 percent) exceeded $1,500 per year.

For basic liability. You know, that rock-bottom minimum coverage for the damage your vehicle causes others. The minimums that have been so low for so long that bipartisan reformers have long ago grown weary of trying to drag them into the 21st century.

For example, Florida's state minimum 10/20/10 ($10,000 bodily injury, $20,000 BI total per accident and $10,000 property damage) isn't likely to go far for anything worse than a fender bender. California's 15/30/5 just flat-out looks like Grandpa's policy.

The CFA study also found that the rates quoted varied widely, even for the same applicant. In one city, the same woman received quotes on minimum insurance that ranged from $762 to $3,390.

"It is difficult to understand how insurers can justify charging more than $1,000 a year for minimum insurance coverage to drivers who have perfect driving records for many years," say Stephen Brobeck, executive director of CFA. "It is also difficult to understand why the same driver is being quoted rates from different insurers that vary so considerably. Insurers say rates reflect risk and cost, but if this in fact is the case, why do their assessments of these factors differ so radically?"

CFA Insurance Director Bob Hunter, himself a former Texas insurance commissioner, called on state insurance commissioners to look into the matter.

"Given the fact that all states except New Hampshire require drivers to carry auto insurance, insurance commissioners have the responsibility to ensure that these drivers are charged fair, affordable rates," Hunter says. "Our research suggests that most rates charged moderate-income drivers are neither fair nor affordable."

How has online shopping for auto insurance worked out for you?

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