The first comparative auto insurance rate survey for Los Angeles County since 1978 was released Monday by the state Department of Insurance, dramatically demonstrating that where drivers live and what company they buy from greatly affects how much they will pay.
The survey used as examples four different types of drivers and included data on 18 different insurance companies that the Department of Insurance said collectively write more than 75% of all California private passenger auto policies.
The release of the rate comparisons comes at a time when sharp debate has erupted in the state Legislature and elsewhere about the effect of large territorial rate differentials which work out in a way that throughout the state economically deprived persons are often charged more for insurance than wealthier ones. Rates are also far lower in rural areas than urban ones. The highest rates of all are paid in Los Angeles County.
The department's chief of consumer affairs, Everett Brookhart, cautioned that the figures provided should be read only as a general indicator because individual variables may lead to substantial differences in prices actually quoted.
But the overriding lesson for the insurance consumer is clear in virtually every community and example cited: Shopping around for insurance can definitely pay off.
- A 42-year-old married man with one at-fault accident in the last two years who drove his Dodge Colt less than 12,000 miles a year and three miles one way to work could buy a coverage package from State Farm for $657 if he lived in Hermosa Beach. But if he lived in Santa Monica, the same package would cost him $1,068 and in Hollywood as much as $1,497.
And if he bought from Farmers, prices, for a similar package, would be $739 in Hermosa Beach, $1,266 in Santa Monica and as much as $2,047 in Hollywood. If he qualified to buy from 20th Century, which sells primarily to the lowest risk drivers, the respective rates would be only $611, $687 and up to $957.
- A 23-year-old single woman who drove her Ford Mustang L under 15,000 miles a year and 10 miles one way to work, and had no accidents or citations, would be able to buy a coverage package for $464 from 20th Century if she lived in Duarte in the San Gabriel Valley, but a similar package would cost her $596 if she bought it from the Automobile Club of Southern California, $935 if she brought it from State Farm, and $1,035 if she bought from Farmers.
If she lived in Compton, a Southside community, 20th Century would charge her about $843, the Automobile Club of Southern California up to $1,341, Allstate a flat $1,632, State Farm as high as $2,003, and Farmers as much as $2,815.
Compton has three ZIP codes and rates with some companies vary there by ZIP code.
The 23-year-old woman could also pay as low as $773 with 20th Century, $990 with the Automobile Club of Southern California, $1,209 with State Farm and $1,901 with Farmers.
But regardless whether the high or low ZIP code area is considered, Farmers is charging far more than 20th Century for essentially the same policy. The Farmers policy is 246% more expensive in the lowest-priced ZIP code in Compton and 334% in the highest priced one.
- A driver of either sex, 30 to 49 years old, who drove his or her Buick Century Ltd for pleasure only, under 7,500 miles a year, and had no citations or accidents, could buy a coverage package for $521 from 20th Century in Tarzana in the San Fernando Valley, but a similar package would cost $715 with State Farm, $773 with the Automobile Club of Southern California, $807 with Farmers and $912 with Allstate.
In Beverly Hills, the similar policy would cost the driver $748 with 20th Century, up to $1,083 with State Farm, $1,124 with the Automobile Club of Southern California, $1,541 with Farmers and as much as $1,285 with Allstate.
The rates quoted were in effect on Nov. 15, 1985, and Brookhart said that it was "not likely but possible" they had changed since that time.
Insurance Commissioner Bruce Bunner said the survey took the department three months to compile from raw rate data provided by the companies.
The release of the comparative rate survey was the second major release of consumer information by the department in recent weeks. In late January, the department released statistics on complaints its investigators had found were justified against 97 companies, all the auto insurers against which there were at least three justified complaints.
In the survey released Monday, information was given for more than 100 different cities and neighborhoods in Los Angeles County, but in some places, particularly in the City of Los Angeles, non-adjacent ZIP codes were frequently lumped together and the price ranges were so substantial as to cast some doubt on the significance of the figures given.
The rating examples include the five basic coverages: bodily injury and property damage liability, medical payments, uninsured motorists, comprehensive and collision.
All figures given were for preferred risk rates, because the majority of drivers would qualify at this level. Assigned risk was not included.
Brookhart cautioned that companies sometimes offer special features on their policies that might not be reflected in the figures provided in the department survey.
The same point was made by a spokesman for Farmers, Jerry Clemans, the company's vice president for public relations.
"The many and frequent discounts that are available, depending on individual circumstances" are not incorporated in the figures provided in the department's "hypothetical examples," Clemans said. He added that Farmers "doesn't accept that we're generally higher than other companies," and questions the value of the survey as released.
The department issued a chart showing which of the 18 companies offered certain discounts or made certain surcharges that were not reflected in the figures provided.
For instance, all 18 insurance groups offer multi-car discounts. Farmers offered a "good-student" discount and an "accident-free" discount that was not offered by some of the other companies listed, and its "non-smoking" discount was unique among the 18 insurance groups. On the other hand, Farmers did not offer the senior citizen discount offered by most of the other companies.
Insurance Department spokesman Jorge Sandoval indicated when the survey was released that persons interested in receiving a copy, with all communities, all companies and all examples listed, could write to the department. But several hours later, Brookhart said such requests could overwhelm the department, and said the department hopes that the news media, particularly neighborhood-oriented newspapers and sections, will publish as much of the survey as possible.