3 Car Insurers That Might Raise Rates Based on Your Prior Insurance Company

Perhaps you knew that being a renter or having lackluster credit could negatively affect your car insurance rates. But what about your previous insurance company?

A new analysis by the Consumer Federation of America (CFA) found that three major auto insurance companies tend to charge higher premiums for good drivers who were previously insured by smaller insurers rather than big insurers. These three companies are:

1. Allstate — which charged an average of 15 percent, or $235, more to good drivers previously covered by a nonstandard insurer than it charged to good drivers previously covered by a big insurer
2. American Family Insurance — 9 percent, or $260, more
3. Farmers — 9 percent, or $166, more

CFA’s analysis found that three other large insurers — Liberty Mutual, Progressive and State Farm — did not engage in this practice. Geico engaged in this practice in only one of the 20 cities CFA examined: Tampa, Florida — where Geico charged up to 72 percent more to drivers previously covered by a nonstandard insurer.

Smaller car insurance companies, which CFA also describes as “non-standard,” account for about 7 percent of the car insurance market. Examples from CFA’s analysis include:

• Access
• Direct General
• Equity Insurance Co.
• Safe Auto Insurance Co.
• Safeway Insurance Co.
• Titan Insurance

For its analysis, CFA used car insurance companies’ websites to get quotes for a driver across 20 cities. For every quote requested, that driver was a 30-year-old female with a perfect driving record. The only differences were in the company listed as her prior insurer.

Douglas Heller, an insurance expert who helped conduct CFA’s analysis, described the findings as “unfair pricing schemes”:

“Where you’ve shopped for insurance in the past should not be used against you, especially when the history that really matters – your driving record – is perfect. Because state laws require us to buy auto insurance, we need insurance commissioners to do a better job protecting us from unfair pricing schemes like this.”

CFA’s findings are also yet another reason to comparison shop — which we cite as step No. 1 in “9 Ways to Drive Down Your Auto Insurance Rates.” As the article explains:

“That sounds like a no-brainer, but many people don’t understand that policies differ among companies based on subjective criteria. Some companies specialize in insuring young drivers. Others are best suited for those with less-than-stellar driving records.”

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