How to Make Your Auto Insurance Affordable

Transcription

1 The Mobility Gap: The Need for Affordable Auto Insurance Focus: Baltimore, Maryland Common Cents Conference September 9, 2014 Marceline White Maryland Consumer Rights Coalition

2 The Mobility Gap: The Need for Low Cost Auto Insurance Focus: Baltimore Common Cents Conference September 9, 2014 Marceline White Maryland Consumer Rights Coalition

3 Driving Need to Drive Why Drive? Patchwork of public transport costs time and mobility Workforce mismatch between workers and jobs.

4 Why Drive Equity Issues Public transportation in Baltimore includes: -Bus system which is inefficient and timeconsuming -Light rail which travels North/South but not East/West -Subway which also travels North/South but goes as far East as Johns Hopkins hospital -free circulator buses which go North/South

5 Costs of Driving Auto insurance can cost working families thousands of dollars a year-often making it too expensive to own a car. Maryland law requires auto insurance. The minimum, limited liability insurance covers $30K for bodily injury for one person, $60K for two or more people, and $15 for property damage for another driver or vehicle.

6 Penalties for uninsured drivers Penalties for uninsured drivers include: -loss of license plates and vehicle registration -$150 penalty for first 30 day lapse, $7 per day for each day after

7 Maryland Insurance Administration MIA oversees operation of insurance agencies. Sellers must file their rates before use. Companies can use the following to develop their rates: -driving records -geographic area -sex -age -marital status -occupation - education One of these things is not like the others. Driving record has a great deal to do with the likelihood of being in an accident. These other factors are about who you are, not how you drive.

8 Maryland Insurance Administration MIA bars insurance companies from using income level to assess rates. -credit history can not be used to deny coverage or increase a premium but it CAN be used to establish new premiums.

9 How do these factors affect costs? How do these different rate factors affect the cost of auto insurance? MCRC conducted research looking at geography, education, and home-ownership. We compared the rates of five insurers using rate information from MIA and webbased research-pulling quotes for four typical consumers. We also drew from research the Consumer Federation of America has done.

10 Meet our driver Single man in his 30s Licensed since age Ford Focus which is financed 20 mile daily round trip commute Buys basic limits policy plus uninsured motorist coverage and comprehensive and collision with $500 deductibles. Perfect driving record-no tickets or accidents. Remember-these factors are the same for every quote.

11 Scenario 1 $1164 Executive with MBA who owns his Homeland house, has prior insurance, and pays in full. Homeland demographics 88.5% of homes owner-occupied 88% of residents, white 8.6% of residents, black 1.8% are Asian, 1.5% Hispanic median income $136, % of residents have a graduate or professional degree

12 Scenario 2 $1504 Executive with HS degree (not MBA) who owns his Homeland house, has prior insurance, and pays in full.

13 Scenario 3 $1730 Janitor with HS degree (not MBA) who owns his Homeland house, has prior insurance, and pays in full.

14 Scenario 4 $1854 Janitor with HS degree (not MBA) who owns his Homeland house, has prior insurance, and pays in installments.

15 Scenario 5 $1940 Janitor with HS degree (not MBA) who rents his Homeland house, has prior insurance, and pays in installments.

16 Scenario 6 $2581 Janitor with HS degree (not MBA) who rents his lower Park Heights house, has prior insurance, and pays in installments.

17 Scenario 7 $3637 Janito with HS degree (not MBA) who rents his lower Park Heights house, has NO prior insurance, and pays in installments.

18 Costs of Non-Driving Factors $1163 difference

19 Other Findings Costs in Baltimore City higher than other wealthier counties. Single man pays at least $500 more in Baltimore City ($1751) than in Montgomery County ($1,204) Single woman pays at least $300 more in Baltimore City ($1621) than in Baltimore County ($1321) and $500 more than in Montgomery County ($1,087). Auto insurance costs a couple an average of $1000 more if they live in Baltimore City than other counties. Auto insurance costs more for those who rent, have less education, and live in certain geographic areas.

20 California: Affordable Auto Insurance California Proposition 103 (1988) stated: No rate shall be approved or remain in effect which is excessive, inadequate, unfairly discriminatory. Auto insurance premiums shall be based on the following factors: * driving safety record * annual miles driven * years driving experience * other factors approved by the Insurance Commissioner * the absence of prior insurance coverage shall not be a criterion for determining rates, premium, or eligibility

21 California Low Cost Auto Insurance Program California also established a low-cost auto insurance program. Eligibility requirements: 19 years of age or older; have been licensed for the past three years; have a good driving record; meet income eligibility-$36,000 for 2 person HH, $55,000 for a 4 person HH. Annual premium: $226-$338 Has insured approximately 40,000 drivers

22 What can we do in Maryland MCRC released our research report on the high cost of auto insurance in January Research spurred the formation of a state task force to look at ways to reduce the number of uninsured drivers-task force will discuss affordable auto insurance as well as punitive measures.

23 Conducing new research on auto insurance and workforce development and rate differences across state. Building a coalition for affordable auto insurancedemonstrate support from broad group of service providers, businesses, advocates.

24 How Can You Help? Have your organization sign onto our coalition letter calling for a low-cost auto program and restricting ratesetting factors to those related to driving. Sign and share our petition with your friends and members. Share our survey with your clients so we can assess the real costs that working families pay for car insurance. Help us make families happy by making car insurance affordable.

25 Join MCRC! Join our list for alerts or contact us with questions, comments. Maryland Consumer Rights Coalition Marceline White s.org