Car Insurance in State Can Vary 300%, Survey Shows

The state Insurance Department on Tuesday released its first statewide comparative survey of auto insurance rates, showing that, depending on where a person lives, the same insurance coverage can vary in price by more than 300%.

For example, the same Allstate policy of minimum coverage that cost a Hollywood resident $1,296 a year in July would have cost a driver in specific neighborhoods in North Hollywood $923, Pasadena $628, Santa Ana $504, Anaheim $446, San Bernardino $398, San Diego $367, Bakersfield $339 and Eureka $306.

And within the same neighborhood, the survey shows, there are sharp variances in rates for similar coverage among insurance companies.

In the Hollywood neighborhood (ZIP code 90028), while Allstate’s policy this past July cost $1,296, similar policies cost $1,346 with Safeco, $1,317 with Farmers, $1,027 with State Farm, $950 with Liberty Mutual, $893 with the Automobile Club of Southern California and $872 with 20th Century.

And in the San Diego neighborhood of Clairemont (ZIP code 92111), while Allstate’s policy cost $367, similar policies cost $389 with Safeco, $355 with the Automobile Club of Southern California, $325 with Farmers, $323 with Liberty Mutual, $322 with State Farm and $300 with 20th Century.

The survey is considerably less complex than one released last March for Los Angeles County only, with 10 companies listed in the present survey instead of 18 and only one rating example cited instead of four.

But with figures from all of the state’s 58 counties and scores of examples from each major urban area, it gives a far more comprehensive picture of comparative prices than was provided last March.

State Insurance Commissioner Roxani Gillespie cautioned that the rating example chosen for the comparison “represents a minimum type of automobile policy.”

“Most Californians buy more protection and drive more miles than our hypothetical example,” she said in a statement attached to the survey. “In addition, in our example the driving record is excellent. In other words, most Californians will be paying more for their automobile insurance than the amounts shown on these charts.”

But Gillespie and the chief of the Insurance Department’s bureau of consumer affairs, Everett Brookhart, said the lessons from this survey are clear.

Pays to Shop Around

First, it definitely pays to shop around for insurance. Companies whose rates are relatively high in one ZIP code may be relatively low in another.

Second, the present system of territorial ratings used by all of the companies means that even adjacent neighborhoods may have quite different rates. Another complication is that companies often use different territorial lines.

For example, the Allstate customer in Van Nuys, under the example given, was paying $923 in July, while in nearby Panorama City the same policy cost $782. But the Farmers customer would have paid $972 in both locations. And the Auto Club customer would have paid $765 in Van Nuys but only $621 in Panorama City.

Insurance industry spokesmen strongly defend territorial ratings as a means of differentiating between neighborhoods and communities depending on their varying accident rates. Higher charges go to those neighborhoods with the largest number of accidents, the most litigation and the largest number of valuable vehicles, in short, the highest cost in claims to the companies.

The reason why Bakersfield and San Diego rates, for example, are so much less than those in Los Angeles, according to the industry, is that there are fewer accidents per capita in these less-congested communities and fewer big lawsuits. The trend is even clearer in places like Eureka and the rural counties of Northern California, where the rates are lowest.

Rating System Critics

Critics of the territorial rating system, however, often point out that, the way the system works, it is often the poor in crowded minority communities who end up paying the most for equivalent coverage. So, they say, insurance costs most for those who can least afford it.

Some states, such as Michigan and Massachusetts, have taken steps to restrict territorial rating differences. However, legislative efforts to do so in California have been defeated, in large part because insurance industry lobbyists have pointed out that, under most such proposals, more insurance buyers would have their rates raised than lowered.

Tuesday’s release of premium comparisons came at the second of a series of three public hearings that Assembly Speaker Willie Brown (D-San Francisco) is chairing on insurance issues. The hearing at the Museum of Science and Industry in Los Angeles was marked by sharp exchanges on the territorial rating issue between legislators and industry representatives.

After a spokesman for State Farm, associate general counsel Pete Ingham, testified that auto insurance is “a good buy” in California, Assembly Majority Leader Mike Roos (D-Los Angeles) declared in bitter tones that it was not a good buy in his district.

“You must live in Glendale, two miles north of me,” he told Ingham.

Roos said premiums in his district are so high that “a terrific social as well as economic cost is being extracted” from his constituents.

‘Moving Somewhere’

“You are forcing people to lie and cheat,” he said. “They are linking up with somebody in Palm Springs, so they can insure their car there, or they are moving somewhere.”

Later, Assemblywoman Maxine Waters (D-Los Angeles), who represents a predominantly black district on the Southside, clashed with the head of Mercury Casualty Co., George Joseph, after Joseph claimed that auto insurance was readily available in South Los Angeles.

Waters insisted that insurance is extremely difficult to purchase in her area and that when it can be purchased it is prohibitively expensive. She asked Insurance Commissioner Gillespie to come to the podium and, standing beside Joseph, Gillespie agreed with Waters that insurance is harder to obtain in South Los Angeles than many other Los Angeles neighborhoods.

Gillespie, however, took issue with Waters on the question of cost. When Waters remarked that many of her constituents are paying $2,500 or $3,000 a year for auto coverage, Gillespie responded:

“They don’t need to pay the prices they’re paying. There are choices available.”

The insurance commissioner said the reason her department is issuing the comparative pricing survey is to make people more aware of the choices they have.

But the head of a consumers’ group said Tuesday that the range of choices--the great variety of both policies and companies writing them--makes it a huge, almost impossible, task for the average buyer to know what is best.

Steven Miller, executive director of the Los Angeles-based Insurance Consumer Action Network, said the state should intervene to regulate rates, simplify them and see to it that everyone has easy access to information about them.

Brookhart, who directed preparation of the survey, working at it for several months, cautioned that the policy example chosen is not typical of the kind of policy purchased by most Californians.

‘Try to Simplify Matter’

“In a state as diverse as this one, there is no such thing as a typical policy,” he said. “We were criticized last time (in the Los Angeles County survey) for giving too many examples (four). So this time, we decided to try to simplify matters and give only one.”

In studying the survey, the Insurance Department official said, the California insurance buyer must realize all the more the necessity of comparing prices for the kind of policy he wants in his own neighborhood.

In the rating example used in the present survey, the insured was aged 35 to 55, and there were no youthful operators of the car. The insured was married, with his or her spouse the same age. There were no traffic citations or accidents within the past three years, and the insured was licensed for more than five years. The insured drove fewer than 7,500 miles a year. The vehicle involved was a 1981 Buick Century with an original cost of $6,501 to $8,000.

Liability coverage was, except for two of the 10 companies, the state-mandated minimum of $15,000 bodily injury for an accident involving a single person and $30,000 for multiple persons, and $10,000 for property damage. Medical payments were usually $1,000, uninsured motorist coverage $15,000 for a single person and $30,000 for multiple persons, and the comprehensive deductible was usually $100 and the collision deductible $200.

Taken as a whole, this is a policy affording considerably less coverage than two examples cited by The Times from the Insurance Department’s Los Angeles County comparative pricing survey of last March.

For instance, the example closest to the present one then permitted commuting to work, driving up to 12,000 miles, having one at-fault accident and had much higher liability limits ($100,000/$300,000 for bodily injury and $50,000 for property damage and medical payments of $5,000 instead of $1,000).

The result is that the prices listed in the survey in March were often quite a bit higher, frequently 33% to 40% higher, than the ones given in the statewide survey released Tuesday.

All the examples given in the Insurance Department’s pricing survey were for preferred-risk rates. Substandard drivers and assigned-risk drivers often pay far more, and consumer advocate Miller said Tuesday he believed that assigned-risk prices should have been included in the survey for comparative purposes.

Gillespie conceded that the impression given by the current survey may be that insurance is less costly than it really is. That is why she said she directed inclusion of the warning in Tuesday’s release that the rating example given was generally for a minimum, not an average, policy.

COMPARATIVE CAR INSURANCE RATES: LOS ANGELES COUNTY The state Department of Insurance assembled this comparison of auto insurance rates by ZIP code. The department warned that the comparison reflects minimum coverage, not average prices. Rates are for a driver between 35 and 55, married, with no young drivers and no citations or accidents, with a 1981 Buick Century worth $6,501 to $8,000 new. Deductibles vary between $100 and $250. Liability coverage is the minimum--$15,000/$30,000 bodily injury and property damage coverage, $1,000 medical and $15,000/$30,000 uninsured motorists. These 10 companies sell most private preferred auto insurance in the state. Their rates--these were in force in July--mayreflect some differences in coverage. In general, all rates vary by such factors as age, gender, type of car, commute and driving record, in addition to home area.

City Auto Liberty ZIP Code Allstate Club Farmers GEICO Mutual Mercury 1. Canoga Park 782 647 810 685 644 526 91303 2. Mission Hills 647 593 757 693 640 578 91345 3. N. Hollywood 923 765 977 722 641 540 91601 4. Pasadena 628 584 604 551 459 488 91101 5. Glendora 485 400 541 496 438 390 91740 6. Pomona 512 438 541 496 438 402 91765 7. Whittier 485 477 509 543 435 392 90601 8. Monterey Pk. 592 566 604 528 459 416 91754 9. South Gate 847 719 795 721 605 540 90280 10. Long Beach 587 523 592 551 453 472 90802 11. Redondo Bch. 556 456 531 574 447 468 90277 12. Los Angeles 1264 910 1417 1029 950 824 90011 13. Santa Monica 852 674 877 703 713 488 90401 14. Beverly Hills 1296 893 1417 1055 950 686 90211

Nation- State 20th wide SAFECO Farm Century 1. 674 852 679 604 2. 654 800 658 604 3. 674 897 676 604 4. 468 551 471 430 5. 453 507 454 430 6. 453 553 454 430 7. 439 553 444 430 8. 468 605 471 430 9. 615 801 620 528 10. 453 576 454 528 11. 457 621 460 528 12. 1017 1393 1027 872 13. 744 1003 744 618 14. 1017 1346 1027 872

COMPARATIVE STATEWIDE CAR INSURANCE RATES

City Auto Liberty ZIP Code Allstate Club Farmers GEICO Mutual Mercury 1. Eureka* 306 349 318 376 290 350 95534 306 349 318 376 290 350 2. Hayward 391 440 409 514 370 400 94541 3. San Francisco 590 657 722 703 559 808 94102 4. Sacramento 436 427 467 459 389 396 95814 3. Fresno 433 419 428 411 371 330 93701 6. Bakersfield 339 389 360 420 326 366 93301 7. Santa Barbara 337 333 317 369 327 306 93101 8. Ventura 396 348 335 454 346 348 93001 9. S. Bernardino 398 411 345 428 372 360 92401 10. Riverside 384 377 414 413 355 338 92501 11. Santa Ana 504 454 517 473 424 318 92701 12. San Diego 367 355 388 382 351 324 92106

Nation- State 20th wide SAFECO Farm Century 1. 268 434 262 342 268 434 262 342 2. 382 524 377 428 3. 570 808 560 528 4. 391 482 387 384 3. 376 518 374 364 6. 321 305 318 312 7. 325 403 325 280 8. 340 455 340 436 9. 373 422 373 354 10. 355 571 355 336 11. 449 538 452 396 12. 354 417 353 300

*Countywide rate figures.