It doesn't matter if you have a perfect driving record. If you're poor, you'll pay significantly more for basic car insurance, a consumer advocacy group said Monday.
In its new report, the Consumer Federation of America (CFA) analyzed price quotes for minimum liability coverage and found that lower-income drivers with perfect driving records were quoted premiums costing an average of 59 percent, or about $681, more than those for drivers with higher incomes.
The Washington, D.C.-based consumer watchdog group said it's unfair for insurance companies to consider motorists' education, occupation, marital status and housing in deciding how much they should pay for car insurance.
One of the greatest disparities popped up in Minneapolis, one of 15 cities where insurance quotes were analyzed. GEICO charged a lower-income female in Minneapolis 300 percent more than a similar female driver with a higher socioeconomic status, the group said.
Robert Hunter, the Consumer Federation's director of insurance, called the disparities "intolerable."
Insurers quickly shot back on the group's findings.
"Balderdash," said James Lynch, chief actuary for the Insurance Information Institute, which represents property and casualty insurance companies.
Lynch disputed the notion that insurers are gouging the poor. Variables such as education level and homeownership may not be related to driving, he said, but they are linked to risk and are commonly used.