Auto insurance (in this study, Geico consistently lowest cos

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Auto insurance (in this study, Geico consistently lowest cos

Postby lindisfarne » Mon Jan 28, 2013 11:10 pm

Consumer Federation of America has published a study showing auto insurance costs in 10 large cities for 2 different driver profiles.
They concluded that typically, poor drivers with good driving records are charged more than higher paid drivers (executives) with 1 $800 at-fault claim (doesn't seem so bad if that's all for the last 10 years?).
Both drive a
2002 Honda Civic 7,500 miles each year and buys only the minimum liability coverage ... In fact, drivers who had at-fault accidents, but had a spouse, a college degree, continuous insurance coverage and home ownership paid less -- sometimes dramatically less -- than a single receptionist with a high school education and a perfect driving record, according to a new survey by Consumer Federation of America.
http://www.cbsnews.com/8301-505144_162- ... insurance/

While that's an interesting finding, what I found highly interesting is the fact that Geico is cheaper in (almost*) every city (for the exec, Geico is always cheaper), usually by a significant amount, than any of the other insurance companies surveyed. State Farm, Allstate, Farmers, GEICO and Progressive. *Receptionist rates from Geico in a few cities are a little higher ($20-60; although Chicago has 1 rate much lower) than 1 other company.

I've always used Geico (never had any more than a glass or roadside assistance claim (happy with those), so I can't say how good Geico is when you have a real claim) and thought my rates were reasonable. Recently, I tried shopping around, just a little, to see if my rates could be decreased (I didn't expect to find anything much lower, but I thought I should compare a bit). I was absolutely shocked at the high rates I was quoted. Had I seen this study, I don't think I would have bothered.

Link to study showing quoted costs across the 10 studies.
http://www.consumerfed.org/pdfs/PR.Auto ... .28.13.pdf
market. It compared premiums quoted to two 30-year old women who each had driven for 10 years, lived on the same street in the same middle-income zip code, and sought minimum liability coverage required by that state. But these two women differed in several important respects: One was a single receptionist with a high school education who rents, has been without insurance coverage 45 days, and has never had an accident or moving violation. And the other woman was a married executive with a Masters degree who owns a home, has had continuous insurance coverage, and has had an at-fault accident with $800 of damage within the past three years.


It seems that Geico was pretty forgiving of 1 at-fault accident in 10 years (which is reasonable) for someone continuously insured. I would have liked to have seen prices for the exec without the accident - I wonder how much they would decrease? (Probably a lot, based on my rates).
Last edited by lindisfarne on Mon Jan 28, 2013 11:31 pm, edited 1 time in total.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby Mrs.Feeley » Mon Jan 28, 2013 11:31 pm

How do insurance companies know a driver's income? Or educational level?

I recently shopped around for car insurance and none asked my income or education level. Is that routine? Or are those things stored in some massive database somewhere?

In shopping for insurance I did find the quote from Geico to be comparable to that from Amica, which I've had for 20 years. But the coverage wasn't as good. I ended up sticking with Amica. Among all the quotes I obtained they were still the lowest and offered the most comprehensive coverage.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby lindisfarne » Mon Jan 28, 2013 11:34 pm

Mrs.Feeley wrote:How do insurance companies know a driver's income? Or educational level?


http://www.dailyfinance.com/2010/01/29/ ... dit-score/
talks about education level being a factor so apparently, the insurance companies have a database they use.
"Age, how long you've been licensed, gender, where you live, how you use your car (how many miles you drive to work or annual mileage), the car's cost, and your driving record used to be the seven things that determined rates," he says. "Unfortunately in the past decade, the largest auto insurance companies have introduced many income proxies such as credit score, your highest level of education completed, and your occupation to determine whether you are eligible to receive the lowest rates."


or see http://www.consumerfed.org/news/599 or http://creditshout.com/blog/understandi ... dit-score/
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Re: Auto insurance (in this study, Geico consistently lowest

Postby Mrs.Feeley » Tue Jan 29, 2013 12:17 am

lindisfarne wrote:
Mrs.Feeley wrote:How do insurance companies know a driver's income? Or educational level?


http://www.dailyfinance.com/2010/01/29/ ... dit-score/
talks about education level being a factor so apparently, the insurance companies have a database they use.
"Age, how long you've been licensed, gender, where you live, how you use your car (how many miles you drive to work or annual mileage), the car's cost, and your driving record used to be the seven things that determined rates," he says. "Unfortunately in the past decade, the largest auto insurance companies have introduced many income proxies such as credit score, your highest level of education completed, and your occupation to determine whether you are eligible to receive the lowest rates."


or see http://www.consumerfed.org/news/599 or http://creditshout.com/blog/understandi ... dit-score/


Perhaps they use Choicepoint or obtain some sort of special "insurance score" from the credit agencies. Although I don't recall our income being part of our credit reports when I've checked them with the various bureaus, although perhaps I didn't look closely enough.

After I did some insurance shopping, asking for quotes from over a half-dozen insurance companies, plus several independent agents, many months later I checked our credit reports. The only accesses of our reports that was listed with any of the bureaus was by Amica. There were no other accesses by the other insurance companies. I figured they had simply looked at CLUE and our zipcode.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby Sheepdog » Tue Jan 29, 2013 12:20 am

Every other year I obtain automobile insurance quotes from several companies. GEICO is always among my highest quotes. They have never been close. Maybe they don't want to insure seniors?
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Re: Auto insurance (in this study, Geico consistently lowest

Postby lindisfarne » Tue Jan 29, 2013 12:23 am

They seem to have access to a lot of personal info. Mortgage apps now ask about educational level.
I think the lesson here is "there is a whole lot more info. in databases about you than you realize".
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Re: Auto insurance (in this study, Geico consistently lowest

Postby Mrs.Feeley » Tue Jan 29, 2013 12:45 am

lindisfarne wrote:They seem to have access to a lot of personal info. Mortgage apps now ask about educational level.
I think the lesson here is "there is a whole lot more info. in databases about you than you realize".


I think that's very, very true. About a year ago I took my husband to the bank because I wanted to add his name to an account. As we sat there at a bank manager's desk I saw some very unusual information about him scrolling across her screen, including the date his parents applied for a social security number for him back in the early 1960s. It seemed like they had pulled up a whole financial and personal dossier on him just by looking at his driver's license. When I asked she said they routinely did full financial and criminal background checks on anyone who wanted to open an account. And in fact she claimed to have encountered potential customers with outstanding warrants for bank fraud. I found this reassuring, but also not. I went home and accessed his Choicepoint profile, which is supposed to be the end-all-and-be-all database for that sort of thing. But Choicepoint had little about him, hardly the breadth of official and personal information I spotted on that bank manager's screen.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby jon-nyc » Tue Jan 29, 2013 4:55 am

lindisfarne wrote:
"Unfortunately in the past decade, the largest auto insurance companies have introduced many income proxies such as credit score, your highest level of education completed, and your occupation to determine whether you are eligible to receive the lowest rates."


I think many of us would say 'fortunately' not 'unfortunately'.


Thanks for the info, Lindisfarne.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby interplanetjanet » Tue Jan 29, 2013 5:20 am

Mrs.Feeley wrote:How do insurance companies know a driver's income? Or educational level?

I get a very substantial discount with Geico due to my occupation (white collar professional). I believe this varies by state.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby rkhusky » Tue Jan 29, 2013 11:10 am

I used to be at GEICO for my car, but when I bought a house, they wouldn't insure it because they said the roof was too old, even though it was in fine shape. I moved to another insurance company and have been with them for 15+ years. I probably should check to see if they are still competitive, but haven't gotten around to it.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby Toons » Tue Jan 29, 2013 11:15 am

I switched to GEICO many years ago (home auto umbrella), I still shop around every so often to compare rates.
No other company matches their rates,so far :happy
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Re: Auto insurance (in this study, Geico consistently lowest

Postby Frugal Al » Tue Jan 29, 2013 11:32 am

Of the 5 largest auto insurers, Geico was consistently lowest. I would hope most insurance buyers venture outside the 5 largest insurers for their quotes.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby JMacDonald » Tue Jan 29, 2013 11:32 am

I just went online to GEICO to get a quote for auto insurance. It was higher by a couple of hundred dollars. Well, so much for GEICO for me.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby Rob5TCP » Tue Jan 29, 2013 7:44 pm

When I decided to get a car (again) having lived a few years in NY without one, I received several quotes. The highest was over $3,600 (which I believe was State Farm).
Most were in the $2,300 - $2,800 range. GEICO came in at around $1,600.00.
I have stuck with GEICO and every 5 years or so I compare. Currently, with 300k liability (I also have separate umbrella), I pay
around $800 with GEICO (including theft/collision).
My last comparison came no closer than $500-$600 more. I will stay with GEICO. Even if someone was a couple of
hundred dollars less, it would not be worth the hassle.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby lindisfarne » Wed Jan 30, 2013 2:48 am

http://www.berkshirehathaway.com/message.html
In a letter from Warren Buffett on the Berkshire Hathaway website:

I estimate that about 40% of all auto drivers in the country can save money by insuring with GEICO. The figure is not 100% because insurers differ in their underwriting judgments, with some favoring drivers who live in certain geographical areas and work in certain occupations more than GEICO does. I believe, however, that GEICO more frequently offers the low price than does any other national carrier selling insurance to all comers.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby Helloeeze » Wed Jan 30, 2013 4:44 am

I just switched to GEICO two months ago for myself and my teenager. I will save $1100 a year from my previous policy with 21st Century, whom I was with for 20 years. GEICO would only insure for six months at a time though, which was concerning, but I couldn't pass up that savings.

I noticed Kredit Karma listed my Auto Insurance Rating, which was excellent. I never knew there was such a rating.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby madbrain » Wed Jan 30, 2013 5:57 am

jon-nyc wrote:
lindisfarne wrote:
"Unfortunately in the past decade, the largest auto insurance companies have introduced many income proxies such as credit score, your highest level of education completed, and your occupation to determine whether you are eligible to receive the lowest rates."


I think many of us would say 'fortunately' not 'unfortunately'.


Thanks for the info, Lindisfarne.


I personally think usage of these factors is completely ridiculous, but of course I'm a very odd duck who didn't complete high school, never set foot in college, took my first driving lessons at the ripe old age of 25, but has a 6 figure salary and 7 figure net worth, and my partner is of the same so we can't get legally married in our state.

Things like marital status, credit score, education and occupation are called "non-driving" factors. Their use is limited in many states for the purpose of setting rates. Even if there are databases out there, the insurance companies are not necessarily allowed to use them to set your rate.

Here is a good article about how the usage of non-driving factors by insurers .

http://bucks.blogs.nytimes.com/2012/09/ ... -premiums/
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Re: Auto insurance (in this study, Geico consistently lowest

Postby jon-nyc » Wed Jan 30, 2013 8:00 am

I can imagine its frustrating being on the wrong side of their statistics. Of course I paid a lot more as a young unmarried male back in the day, but deservedly so.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby rkhusky » Wed Jan 30, 2013 9:05 am

jon-nyc wrote:I can imagine its frustrating being on the wrong side of their statistics. Of course I paid a lot more as a young unmarried male back in the day, but deservedly so.


I paid a lot more as a young unmarried male back in the day, undeservedly so.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby FRANK2009 » Wed Jan 30, 2013 9:10 am

I had my auto insurance with GEICO for about 15 years. When they raised my rates about 30% for no good reason, I shopped around and found a much lower rate. Moral of the story: shop around; these companies have no loyalty to you, you shouldn't be loyal to them.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby gt4715b » Wed Jan 30, 2013 3:16 pm

Good article. It seems like the moral of this story is that everyone should get quotes from GEICO and State Farm when buying auto insurance.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby ensign_lee » Wed Jan 30, 2013 3:23 pm

It's very regional.

For me, Geico was a 40% increase from my State Farm rate (male, 25, drives a convertible mustang with 1 accident in the last 10 years) in Texas.

So it was an easy decision for me.

Plus, of all the body shop owners I've ever talked to, they always say that working with GEICO is the worst. They always want to cheap out on repairs, opting to either not repair something the shop recommends having repaired (examples include front airbags, side airbags, critical suspension components) or to source the repair from a junkyard. I guess it saves money, but to me as the customer I woudl rather have things fixed right when they are fixed.

For that reason (and because State Farm treated me so well in my one accident), I would never consider Geico above state farm.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby janelane » Wed Jan 30, 2013 8:28 pm

I've only ever had GEICO. I originally went with them because they were the cheapest; I stay because of the great customer service. A couple of years ago, my car was stolen. GEICO handled everything, the process was very smooth. They also paid for a rental car even though I originally did not have that coverage as part of my insurance. One of my previous bosses always sings praises for GEICO. They were very accommodating to her after her husband passed.

State Farm gave me a really ugly quote, but that was a couple of years ago.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby ejvyas » Wed Jan 30, 2013 8:54 pm

Geico has quoted very aggressively since entering MA; better quotes than other well established insurance companies here.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby pennstater2005 » Wed Jan 30, 2013 9:12 pm

I recently received an online quote from Geico for two cars fully insured for $739/6months (2007,2008 model years). I currently have AAA auto insurance for $523 for same level of coverage. Unfortunately for me they couldn't even come close.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby grabiner » Thu Jan 31, 2013 12:47 am

lindisfarne wrote:Link to study showing quoted costs across the 10 studies.
http://www.consumerfed.org/pdfs/PR.Auto ... .28.13.pdf
market. It compared premiums quoted to two 30-year old women who each had driven for 10 years, lived on the same street in the same middle-income zip code, and sought minimum liability coverage required by that state. But these two women differed in several important respects: One was a single receptionist with a high school education who rents, has been without insurance coverage 45 days, and has never had an accident or moving violation. And the other woman was a married executive with a Masters degree who owns a home, has had continuous insurance coverage, and has had an at-fault accident with $800 of damage within the past three years.


The "without continuous insurance coverage 45 days" is properly a driving factor; she was in violation of the law (at least if she drove her car during those 45 days).

Also, the $800 accident might not have been counted as at-fault. My own policy (in NJ) only counts an accident as at-fault if the total paid claim exceeds $1500. The $800 accident reported to police would either be not counted or be counted as not-at-fault.

And another bias is that the executive would not have the minimum liability coverage required by the state. The receptionist might well have the minimum required coverage because she does not have significant assets at risk in a suit; the executive is much more likely to need more coverage because her assets and income could be targeted.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby Cyclone » Thu Jan 31, 2013 12:59 am

I had very bad experiences with both Geico and State Farm where the other party was insured by them, and I was not at fault. I would rather stick needles in my eyes than give my business to either of those two. I did have a good experience when the other party was insured by Farmers (another accident where I was not at fault in case you were wondering). I have been with 20th Century for quite awhile, and by coincidence they are now owned by Farmers.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby Sulvar » Thu Jan 31, 2013 11:12 am

A family member of mine previously worked for GEICO. Every insurance company is different, but I know that GEICO heavily weighs education and profession when quoting rates. It is all based on statistics that the actuaries for each insurance company come up with, but GEICO believes that people with more education typically have fewer accidents than people with lower levels of education. They also believe that teachers and engineers have fewer accidents, while doctors and police officers have the most.

As for how the insurance companies get this information? They ask you for it when you are applying online or over the phone.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby investor1 » Thu Jan 31, 2013 1:26 pm

Sulvar wrote:They also believe that teachers and engineers have fewer accidents

I guess that's why they are so cheap for me! I saved 20% when I switched from Progressive to Geico. I have never had an insurance claim, so it seems I just send them money every six months. I want that to be as cheap as possible.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby madbrain » Thu Jan 31, 2013 10:39 pm

grabiner wrote:The "without continuous insurance coverage 45 days" is properly a driving factor; she was in violation of the law (at least if she drove her car during those 45 days).


Of course, they don't know whether she drove the car or not, they are just assuming that, which may or may no be the case. She is presumed to be guilty.

And another bias is that the executive would not have the minimum liability coverage required by the state. The receptionist might well have the minimum required coverage because she does not have significant assets at risk in a suit; the executive is much more likely to need more coverage because her assets and income could be targeted.


That would seem to be a good reason to charge the executive a higher premium if he is more likely to be targeted in a suit, yet the insurance companies do the opposite.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby madbrain » Thu Jan 31, 2013 10:53 pm

Sulvar wrote:They also believe that teachers and engineers have fewer accidents, while doctors and police officers have the most.


And I really wonder how they figure that out. My profession is software engineer (though I'm self taught and thus don't get the benefit of occupational insurance discount for it). I have never been in an at-fault accident. But I have been in quite a few not-at-fault accidents.

In my first 12 months of driving, a (most likely drunk) driver ran a red light on Super bowl sunday. He nearly killed my bf. He drove away - it was a hit-and-run. The driver was uninsured and with an out-of-state license plate. He was never found. There were 3 witnesses. But the accident happened 80 miles from my home. There were no parts for my 2001 Prius then as it was too new, and it took over a month to get fixed. There was over $8000 of body work which Allstate paid.

Most recently, a few months ago, somebody (another engineer!) rear ended my car in the parking lot at my work, while it was parked, and I was working in the office - not in the car. He was kind enough to leave a note. The damage was below my $1000 collision deductible, and I had to deal with the other driver's insurance company, which was a pain, it took about a month.

Sadly those are just 2 examples of many other not-at-fault accidents. Perhaps I'm just unlucky, but I don't think the likelihood of being in a not-at-fault accident is different regardless of occupation, and those are the only type of claims I have ever had.
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Re: Auto insurance (in this study, Geico consistently lowest

Postby rallycobra » Thu Jan 31, 2013 11:41 pm

I previously was a Geico customer for auto, but when we purchased a house the home cost was astronomical. Our agent switched us to Selective and we saved amost $2k a year on home/auto/umbrella. I still get calls and emails from Geico asking us to come back ;)
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Re: Auto insurance (in this study, Geico consistently lowest

Postby mike143 » Fri Feb 01, 2013 6:13 pm

Ran a quote against Amica, $100 less a year than Amica (not including $1M umbrella), not enough to get me to change.

Sources of decisions to keep Amica.

http://www.badfaithinsurance.org/indexd ... ml#rsrch01
http://www.consumersearch.com/auto-insurance
http://www.consumersearch.com/auto-insu ... -insurance
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