Homeowners’ Insurance Cost Varies Widely : Consumers: Garamendi says state survey shows residents should shop around for best deals. Insurers say costs between communities differ because of such factors as crime and fire protection.
Urging California residents to “shop around” before purchasing homeowner insurance policies, state Insurance Commissioner John Garamendi Wednesday released a statewide survey spotlighting dramatic price differences between identical policies offered by the state’s 26 largest insurance companies.
The survey also revealed major price differences between identical policies purchased in various communities and regions of California. San Diego boasted the lowest average price in the state--$439 compared to $553 in the greater Los Angeles-Orange County region. The highest prices were generally found in poorer, inner-city communities--$652 in Compton, for example.
Garamendi said the study did not deal with such provocative issues as discrimination or differences in service among insurance companies. Rather, he said, the report was intended only to make clear that consumers can benefit by comparison shopping.
“It’s quite possible in Glendale to purchase a policy at twice the cost of another,” said Garamendi, elected last November in the first race for the state post. “The message to consumers . . . is be a wise shopper, shop for price, shop for quality and service, but be sure to compare.”
Industry spokesmen said the results were not surprising, given the varying levels of service provided by competing companies. Costs between communities vary, they said, because of such factors as crime and fire protection.
“If companies were overpricing,” asserted Richard Wiebe of the American Insurance Assn., “the competitive market would insert another player into the market who would take the business.”
Garamendi’s survey, which also looked at renter and earthquake policies, made comparisons based on a $150,000 policy for a wood-frame home built in 1950 with a $250 deductible. Contents in the home would be insured for $75,000.
The cheapest policies across the state--averaging $412 to $420--were written by 20th Century Insurance Co., Cigna Group and CNA Insurance Cos., Garamendi said. On the top end--with prices ranging from $606 to $714--were Century-National Insurance Co., Royal Insurance Group and Chubb Group of Insurance Cos.
Of the three firms that write approximately 50% of all homeowner policies in the state, Allstate averaged $522, State Farm averaged $526 and Farmers Insurance Group averaged $555.
Garamendi said the wide range in prices reflected a lack of comparison shopping by residents across the state.
“The market is not a perfect market,” he told a Los Angeles press conference. “Consumers are not aware of the great price disparities that exist.
“When consumers are well informed,” he added, “you’ll see a narrowing of the range.”
But industry spokesmen were quick to challenge the thesis.
“We have always encouraged consumers to shop around for the best possible deal,” said Wiebe, whose organization represents 220 insurance firms. “But not only from the standpoint of price but from the standpoint of service.”
New Jersey-based Chubb, for example, specializes in expensive properties and sends an agent to the premises to suggest methods for avoiding fires and burglaries, Wiebe said. 20th Century, on the other hand, does most of its business over the phone from referrals, resulting in low advertising and sales costs.
“If you were going to buy a car, you can buy a stripped-down Chevrolet or you can buy a Mercedes-Benz,” said Chubb spokeswoman Mary Lu Korkuch. “Someone might say you’re getting ripped off buying a Mercedes, but it depends on what you want.”
In Garamendi’s survey, the lowest prices after San Diego’s were in the Central California region that includes Ventura and Santa Barbara counties. The average there was $496. Prices in the San Bernardino-Riverside County area averaged $502.
Within the greater Los Angeles-Orange County area, average prices ranged from $421 in Mission Viejo and $425 in Huntington Beach to $607 in Inglewood and $674 in West Hollywood.
Across the Southland, some carriers offered prices $100 to $200 lower than the average.
In Van Nuys, for example, a 20th Century Insurance Co. premium would cost $390--compared to a Van Nuys average of $572.
Earthquake policy rates also varied between firms by as much as $1.75 per $1,000 of insurance. For example, Resident Mutual Group’s rate of $1.25 in Alhambra was far better than the average of $2.08.
CALIFORNIA HOMEOWNER INSURANCE RATES 1991
Regional average, in premium dollars per year, by county. A. Greater Los Angeles / Orange County: $553 B. San Bernardino / Riverside: $502 C. San Diego: $439 D. Central California: $496 E. San Francisco / Bay Area: $523 F. Sacramento: $555 G. Northern California: $557 Statewide: $518
A statewide survey released by Insurance Commissioner John Garamendi shows costs for homeowner insurance vary widely from region to region and from one company to another. Figures below are the average annual premium, by company, for a $150,000 homeowner policy on a basic wood-frame dwelling. Categories A-G below correspond with regions indicated in chart above.
COMPANY REGIONS A B C D E F G 20th Century Ins. Co. $419 $433 $358 $411 $415 $428 $422 Cigna Group 472 347 352 391 451 441 446 CNA Ins. Companies 481 398 354 391 443 440 433 Prudential of America 489 484 390 441 465 494 473 Residence/Western Grp. 507 456 382 464 466 505 535 Ohio Casualty Grp. 440 455 411 457 505 526 545 Transamerica Corp. Grp. 529 458 467 446 474 493 482 Continental Ins. Cos. 598 392 315 457 585 495 511 Fireman’s Fund Ins.Cos. 478 479 416 444 492 554 557 Auto Club of S. Cal.(AAA) 548 524 441 452 NA NA NA Home Ins. Company 519 471 373 498 488 575 567 Safeco Ins. Companies 560 455 457 435 524 521 550 Liberty Mutual Ins.Cos. 525 530 447 482 489 538 491 California Ins. Grp. 600 405 490 483 513 562 581 Allstate Ins. Grp. 541 512 406 521 518 608 551 State Farm Grp. 546 607 481 485 494 552 518 Aetna Life & Casualty 562 538 439 522 561 518 542 Republic Financial Serv. 566 481 477 514 545 565 566 Reliance Grp. Inc. 606 499 481 491 553 570 581 ITT Hartford Ins. Grp. 630 585 453 495 537 571 569 Farmers Ins. Grp. 592 571 496 561 532 581 549 Farmers Home Grp. 553 467 449 597 536 621 676 CA State Auto Assoc.(CSAA) NA NA NA 592 560 587 578 Century-National Ins.Co. 599 620 509 617 554 663 682 Royal Ins. Grp. 700 633 581 640 697 715 718 Chubb Grp. of Ins. Cos. 788 750 557 621 702 762 821 REGIONAL AVERAGE 553 502 439 496 523 555 557
COMPANY State 20th Century Ins. Co. $412 Cigna Group 414 CNA Ins. Companies 420 Prudential of America 462 Residence/Western Grp. 473 Ohio Casualty Grp. 477 Transamerica Corp. Grp. 478 Continental Ins. Cos. 479 Fireman’s Fund Ins.Cos. 488 Auto Club of S. Cal.(AAA) 491 Home Ins. Company 498 Safeco Ins. Companies 500 Liberty Mutual Ins.Cos. 500 California Ins. Grp. 519 Allstate Ins. Grp. 522 State Farm Grp. 526 Aetna Life & Casualty 526 Republic Financial Serv. 531 Reliance Grp. Inc. 540 ITT Hartford Ins. Grp. 549 Farmers Ins. Grp. 555 Farmers Home Grp. 557 CA State Auto Assoc.(CSAA) 579 Century-National Ins.Co. 606 Royal Ins. Grp. 669 Chubb Grp. of Ins. Cos. 714 REGIONAL AVERAGE 518
NOTE: Central California region includes, among others, the cities of Oxnard, Santa Barbara, Fresno and Bakersfield.
NA: Coverage not available.
Source: California Dept. of Insurance
