Can Your Marital Status Inflate Auto Insurance Rates?
In the world of auto insurance, one word keeps popping up: risk. The insurance industry, as a whole, is all about risk – companies want low risk clients, clients want low risk insurance policies, but risk plays a huge part in determining how much you pay. Unfortunately, the concept of risk isn’t as easily measured as something like, say, distance or price, so insurance companies had to determine a way to accurately assess the risk of a client, resulting in the questionnaires clients are asked to fill out before receiving a price quote.
But which parts of the questionnaire influence your rates? Surprisingly enough, your marital status can have a large impact on the final quote you get. The Consumer Federation of America brought this to light in a recent analysis that examined 6 major insurers in 10 major American cities. Posing as a hypothetical 30-year-old single woman, the organization found that for most major insurers, online quotes were usually higher for single, divorced, or widowed drivers. On average, this hypothetical woman’s insurance quotes were 14% higher if she was a widow.
The Study
For the study, researchers went to the websites of the 6 chosen major insurance companies and entered the information for their hypothetical 30-year-old woman. The policy she was shopping for a simple state minimum liability insurance, and the client had no history of accidents or moving collisions. She had a high school diploma and rented an apartment in a ZIP code with an average household income of about $30,000.
These details remained the same each time a researcher applied for a quote. The only variable that changed from test to test was the client’s marital status, and by adjusting that, the researchers found that this seemingly insignificant factor did play a role.
Industry Response
Some insurance companies dismissed the allegations entirely, stating that their algorithm doesn’t take marital status into account, but some companies were more transparent with their methods, sharing why marital status might effect a person’s risk factor and, therefore, their premium.
One company offered a discount to those in a stable, committed marriage. This policy wasn’t put in place to punish or disadvantage those who are currently married – it was simply a gesture towards married couples who, in the company’s experience, were more reliable clients. It’s less about judgement and more about making an assessment of the factors that correlate with high-risk clients.
The same can be said for companies that consider a client’s credit score before giving them a quote. Many insurance companies look at your credit score to determine how reliably you stuck to previous commitments like loans and credit cards. This information can be extremely useful and, as many factors taken into consideration, offers just as many benefits as it does setbacks.
Looking for ways to lower your auto insurance rates? Check your credit report for errors to make sure it presents an accurate record of your financial commitments and call or click today for more information on choosing a California auto insurance policy that fits your needs and your budget.
