Report: Low economic status could mean higher insurance rates

- A new report shows your insurance costs are less about keeping your hands at 10 and two - and more about what you do from nine to five. In other words, if you make less money, you could be charged a lot more for your car insurance. 

The Consumer Federation of America (CFA) released a study that found blue collar drivers pay higher premiums for car insurance than white collar, and it’s a pretty significant difference - at an average of $680 more a year.

CFA researchers signed hypothetical customers up with the five biggest car insurers in 15 U.S. cities. They only looked at liability insurance, not collision insurance, and found that, despite having the same driving record and living at the same address, drivers with a high school degree, an hourly job, had not owned a car or had car insurance in the last six months, were unmarried, and rented their residence paid higher premiums 92-percent of the time - compared to people with higher degrees, salaried jobs, owned a car and had insurance in the last six months, were married and owned a home.

To add to that, Consumer Reports also did a two-year investigation and found many insurance companies base rates on a "hidden" credit score.

This is not the same as your FICO credit score.

Insurance companies looked at things like what type of credit cards you use, whether you've applied for a credit card recently, and even your TV and internet provider. Those factors are then used in algorithms by the insurers, which, according to Consumer Reports, means your price is set based on how likely you are to file a claim, versus how good of a driver you are.

Only California, Massachusetts and Hawaii ban that practice. Here in Florida, insurers are free to set those standards. The industry is regulated on a state-by-state basis, which makes transparency tough.

Consumer Reports found the following companies offer the lowest prices:

- Amica
- USAA
- State Farm

It said, if you think you might be considered "low economic status," State Farm is your best option, which charges blue collar customers only $217 more - compared to others which charge blue collar customers between $614 and $915 more. 

Consumer Reports suggests using TheZebra.com, a website providing customized premium quotes from 18 to 35 insurers per state.

Up Next:


Up Next

  • Report: Low economic status could mean higher insurance rates
  • Toys 'R' Us files for bankruptcy protection
  • Irma insurance claims already near $2-billion
  • Free legal help hotline open for Irma victims
  • Duke apologizes for billing mistakes
  • Fraudulent contractor hotline set up after Irma
  • Olive Garden all-you-can-eat 'Pasta Pass' is back
  • Equifax hack: How to freeze your credit
  • Sam's Club waives membership fees to help Irma victims
  • FEMA: How it works and how to reach them