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buying Consumer Group Blasts Auto Insurers for Paltry Low-Mileage Discounts

18:26  04 april  2018
18:26  04 april  2018 Source:   moneytalksnews.com

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Recent research by the nonprofit Consumer Federation of American (CFA) shows that while spending less time behind the wheel lessens your odds of getting into a crash, not all major auto insurers offer significant discounts to low - mileage drivers.

A national consumer group says people who drive less aren't getting the price breaks they deserve from most of the big auto insurance companies. "The failure of most major insurers to use mileage to help determine prices discriminates against lower -income and older drivers and in doing so also

If you’re hoping for a car insurance discount because you or someone else on your policy doesn’t drive much, you better shop around.

Recent research by the nonprofit Consumer Federation of American (CFA) shows that while spending less time behind the wheel lessens your odds of getting into a crash, not all major auto insurers offer significant discounts to low-mileage drivers.

On average, folks outside of California save $30 per year, or 1.6 percent, for every 5,000 fewer miles driven. That’s compared with an average savings of $81, or 8.7 percent, in California — which is an exception because its regulations require insurers to charge lower-mileage drivers less.

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Can You Negotiate With Car Insurance Companies For Better Rates? Consumer Group Blasts Auto Insurers for Paltry Low - Mileage Discounts . What Americans spend on car insurance in every state.

For more information about the Safeco Low Mileage Discount , talk to your local independent agent. Current customers: To maintain your low mileage discount , please confirm your mileage on the following pages. auto insurance.

Analyzing mileage discounts

For its research, CFA got premium quotes for basic liability coverage in 12 different U.S. cities — one in California, and the rest elsewhere. The quotes were from five large auto insurers:

  • Allstate
  • Farmers
  • Geico
  • Progressive
  • State Farm

The quotes all were for a driver with an unblemished record. So, the only differences between quotes, besides the insurers and the cities, was the number of miles driven per year. Annual mileage varied from 2,500 to 22,500.

How the 5 insurers fared

From one insurer to another, low-mileage discounts vary from nonexistent to double digits.

CFA singled out Farmers and Progressive as being particularly stingy in the 11 non-California cities included in CFA’s analysis:

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A national consumer group says people who drive less aren’t getting the price breaks they deserve from most of the big auto insurance companies. “The failure of most major insurers to use mileage to help determine prices discriminates against lower -income and older drivers and in doing so also

Low - mileage discounts – Reduced premiums for annual mileage that falls under a certain cap. Usage-based discounts – Savings for good driving habits (monitored by a device you place in your vehicle).

Progressive and Farmers usually charge the same rates to someone who drives only 2,500 miles a year as they charge someone else who drives 22,500 miles a year — nine times as far — all else being equal.

Geico offers “a small price reduction” for lower-mileage drivers outside California, CFA found. Allstate and State Farm offer average reductions of 11 percent and 13 percent, respectively, outside California.

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CFA argues that car insurance rates should be based more on driving-related factors such as mileage than on socioeconomic factors like your credit score or marital status.

J. Robert Hunter, director of CFA and a former Texas insurance commissioner, notes:

“For people in most parts of the country, with California as the notable exception, you’ll often pay about the same auto insurance premium whether you commute 90 miles round trip every day or if you take public transit to work and only drive on the weekends.”

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Consumer Group Blasts Auto Insurers for Paltry Low - Mileage Discounts . Karla Bowsher on April 3, 2018. You might think your car insurance company will give you a price break for driving less. But not all insurers offer discounts to low - mileage drivers.

Low mileage discount : 5 percent to 15 percent. Available to: Policyholders who drive less than a specified number of miles each year, usually 7,500 to 10,000 miles. For example, when you turn 25 it’s likely you will be placed in a different group with your auto insurer -- one with a lower base rate

For its part, Progressive says on its website that it normally does not ask policyholders to report their mileage, but that it does reward low-mileage drivers through its Snapshot program, which monitors driving behavior in exchange for discounted rates.

Farmers says on its website that drivers who limit their time behind the wheel “may therefore enjoy low-mileage discounts.”

Nonetheless, until laws change outside of California, consider this a reminder of the importance of periodically shopping your insurance policies around to confirm you’re getting the best rates for which you can qualify.

What’s your experience with car insurance discounts like low-mileage discounts? Share with us below or on Facebook.

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