Quoted Prices Vary Widely : Shopping Around for Car Insurance: It’s ‘Potluck’
The best advice to motorists seeking car insurance is to shop around, consumer groups and state officials agree. The prices for identical coverage can vary widely between companies, even in the same ZIP code, the experts say.
But when a leading consumer group tried to shop around--by telephone, with 20 different insurance companies--it found that it was virtually impossible to do.
“It’s a kind of potluck system, depending on who you call,” said Carmen Gonzales, who directed the experiment for the California Public Interest Research Group (CalPIRG). “And there’s the whole other issue of whether the quote you’re given is accurate.”
Gonzales said that when she made the calls, ostensibly on behalf of a 35-year-old male seeking insurance for his 1984 Toyota in the 90019 Los Angeles ZIP code, near La Brea Avenue and Olympic Boulevard, she found several agents and companies to be uncooperative.
The agents often refused to quote prices over the phone, and in some cases the companies even refused to send them out in the mail.
When agents did quote prices, Gonzales said, they often varied so greatly, even between different agents within the same company, as to leave a potential buyer confused.
According to the CalPIRG report, when presented with an identical buyer profile, three agents of State Farm, the state’s biggest auto insurance seller, quoted annual rates of $1,697, $2,111 and $2,938--a variation of $1,241 or 73%.
Three agents of Farmers varied by 55%. Their prices for the same policy ranged from $2,316 to $3,586.
Three agents from Travelers ranged from $2,446 to $3,026, and three written quotations for the same policy from Travelers affiliate companies ranged from $3,213 to $6,523.
One agent from Allstate quoted a price of $3,043. Three other Allstate agents said the company would not sell to the driver for whom the inquiry was being made. The agents did not give a precise reason for refusing the business, CalPIRG said.
Some Won’t Give Quotes
One Kemper agent quoted a price of $2,394. But a second refused to quote, saying the company rarely accepts new customers. A third said he would not quote prices to callers who had gotten his name from the Yellow Pages. A fourth said he would not give a quote without checking the inquirer’s driving record.
Not all companies and their agents varied so dramatically in their estimates, according to the CalPIRG study.
Three agents of the Automobile Club of Southern California varied only 5%, ranging from $2,286 to $2,400. The company refused to give a written quote.
Two Liberty Mutual agents quoted the same price--$1,940. But a third said his company would not insure such a driver, and the company refused to give a written quote.
Other companies with only small variances in prices quoted were Fireman’s Fund and GEICO. Four Fireman’s Fund agents were within 5% of each other, although the company made no response to a request for a written quote to CalPIRG. Two GEICO agents were within $1 of each other, $1,611 and $1,612, although a third said he would not insure this driver profile.
At Hartford, on the other hand, two agents quoted $2,213 as the price, a third cited $2,410, a fourth quoted $3,666, a fifth said the company had set a moratorium on selling auto insurance, and a sixth said he would not make a quote without checking the driver’s record. At Mercury, the company’s written quote was $1,342, but the top agent quoted $2,258, a variance of 68%.
Six Safeco agents queried showed a variation of 120%, with the lowest of six agents at $1,360 and the highest at $2,995.
Twentieth Century and Amica were given a second driver’s profile, for a 50-year-old female. The variation in Twentieth Century quotes was 25% and in Amica 32%.
“I found it very shocking,” Gonzales said. “We didn’t have any idea the difficulties would be as dramatic as they turned out.”
‘Helpful’ Service
State Insurance Commissioner Roxani Gillespie, informed of the CalPIRG findings and Gonzales’ statements, said she believes the study was a “very helpful” public service.
“It has become obvious to me that what is lacking from the system is a readily understandable statement of the companies’ insurance programs and what is the best deal you can get for yourself,” she said.
“Consumers don’t know many details, and the system as it currently stands does not really afford them an opportunity to find out,” she said.
Calls by The Times to a number of the insurance companies mentioned in the CalPIRG report drew varied explanations for the price quote discrepancies.
Ed Mathews, vice president in charge of corporate relations for the Farmers group of companies, said he found it hard to understand how the quotes could have varied so much among Farmers agents. But he added that the company offers different insurance packages and that one agent might be marketing a different package from another agent.
“There are different combinations of coverages, such as the nonsmoker package,” Mathews said. “Our agents are supposed to quote the straight coverage when people call them on the telephone. . . . But we’ve coached our agents that they must see a person eyeball to eyeball when they sell insurance.”
Mathews added that any rate inquiry involves many factors that must be checked out.
“The rate manual is complex,” he said. “Were they actually talking to the agent or a clerk?,” he asked of the CalPIRG study. “It’s rather complicated. They (the agents) probably didn’t check it as carefully as they should.”
Travelers Vice President Alan Fletcher said, “We have a number of different subsidiaries and there are a number of different (coverage) plans.”
Fletcher called Gonzales for precise information as to which agents and which company branches she had talked to. After evaluating the details of the requested coverage, he said that company officials had determined the proper price would be a little more than $3,000--somewhere between the $2,446 and $6,523 quotes that company representatives had given CalPIRG.
“In our company, there’s the potential for four different rates,” said Peter Ingham, a national spokesman for State Farm. “Just listening to the details (given in the CalPIRG rate inquiry) I’m not sure there’s enough information. . . . And if it’s not a ZIP code the agent gets involved with regularly, he might not know what rating area it was in.”
An associate of Ingham, Ron Arnold, added:
“I can see why two agents might give different quotes. On a telephone inquiry, he’s going to say, ‘Is this guy serious, or am I just putting a quote out there?’ If he thinks it’s serious, he’ll put in more time.
Hit-or-Miss Proposition
“At any rate, he’s got to see the car, make sure it exists. He can’t do the sale over the phone. Once he’s determined it’s authentic, then he can give you a more specific price.”
Gonzales, informed of the responses, said they only confirm her point that shopping around is a hit-or-miss proposition.
“It’s true that depending on the agent you contact, he may be empowered to write only for a particular plan or company affiliate,” she said. “But the consumer doesn’t know that. From the consumer’s perspective . . . they’re simply trying to get a price quote.”
CalPIRG’s rate inquiry was for a married male, age 35, an electronic technician who drove a 1984 Toyota Corolla, 4-door sedan, 4-cylinder, automatic, five miles to and from work each way. He had had one minor moving violation but no accidents in the prior three years. His wife, aged 30, was an occasional driver of the vehicle, for pleasure only, and had no traffic violations or accidents in the prior three years. The couple drove 10,000 miles a year. They were seeking $100,000/$300,000 bodily injury liability, $50,000 property damage liability, $200 deductible collision coverage, $100 deductible comprehensive, full towing and road service, $15,000/$30,000 uninsured motorist and $2,000 medical payments.
