Good Drivers Insured By Non-Standard Insurers Are Usually Faced With Higher Rates

“A study by CFA found that good drivers who were previously insured by non-standard insurers are faced with higher auto insurance premium”

A research conducted by CFA found out that national insurance giants usually charge good drivers who were previously insured by smaller insurers nine to fifteen percent higher. “This practice especially penalizes motorists in lower-income communities, leaving them with few options outside of lesser-known and often higher-priced insurance companies,” said J. Robert Hunter, CFA’s Director of Insurance.


Hunter said standard firms usually turn down high risk customers and the ones from low-income groups, which forces them into the hand of non-standard insurers. An then when they want to switch into the bigger companies, they are refused again for previously using the non-standard.

CFA use the companies’ websites to test whether seven of the biggest insurers in the country charge higher for auto insurance quotes if the customer switched from “non-standard” insurers rather than other big players in the field. The hypothetical driver had a clean driving record.

Allstate, Farmers, and American Family used the customer’s previous insurers as a driving factor to the offering quotes. The research found. All state charged the driver that was covered by non-standard insurers 15% higher than if she was insured by State Farm. Farmers and American Family charged 9% higher in a similar situation. CFA’s test also found that some other major companies, State Farm, Liberty Mutual, and Progressive, didn’t increase rates if customers were insured by smaller companies.

The finding of this research reveals another problem regarding auto insurance quotes faced by low-income citizens and predominantly minority groups, who account for about 18 million Americans. Another research conducted by Consumer Reports and ProPublica found that good drivers living in minority neighborhood are also charged higher than citizens of white one.

Research has shown that a good job requires an automobile to commute to work. Auto insurance is required by law in most states except for New Hampshire. Unaffordable quotes can result in people driving without insurance and get fined car impoundment and even jail time.

How to find the best premium when switching from non-standard firms?

Shopping around is still a great way to lower your auto insurance quotes. So here is what you should do, first call a few local agents to see what they have to offer, and then go online to get quotes from companies that you see fit. Online quotes are now quite quick and easy. All you need to do is to answer some questions about your car’s make, model, age, value, modifications, and registration number. Your information is also required for an accurate quote. Enter your age, job, neighborhood, driving history. Driver’s license and names of anyone who will be driving your car need to be provided.

Be aware of costs other than premium

Premium is not the only sum of money you need to pay in order to have your car insured. Some non-standard firms charge “policy fee” of about $30 to $50 to purchase coverage. You should also look for installment fee, the sum you have to pay if you wish to pay in chunks rather than in full. Hidden costs can come with record checks. Larger firms perform this every year or every two years while some smaller ones do it every six months, which add fees to your seem-so-cheap initial rates. Non-standard firms don’t often offer coverage for punitive or exemplary damages, which leaves you responsible for most of the costs if you get yourself into an accident that is your fault. While this is not exactly a hidden cost, it can bring you a big financial problem when accidents happen.

About criteria that are not driving-related insurers base on to calculate quotes

There are some states that prohibit using credit history, educational level, or customers’ occupations to set rates. This may result in a fairer premium for good drivers who have a low-paid job or do not go to collages but can raise the premium of those who are having better quotes because of their jobs.

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