Car Insurers Hiking Rates on SUVs
Two of the nation’s largest auto insurers are raising liability premiums for sport-utility vehicles, pickups and big vans because of evidence that they cause more damage in collisions, the New York Times reported Saturday.
Allstate Insurance Co., the nation’s second-largest auto insurer with 20 million covered vehicles, has changed how it charges for liability coverage in several states, the newspaper said. Liability coverage is the portion of the insurance premium that covers damage to other vehicles.
Los Angeles-based Farmers Insurance Group, the third-largest insurer, is planning similar changes for next year.
In basing rates on a vehicle’s propensity to cause damage to other cars, the companies are breaking with many other insurers--including the nation’s largest carrier, State Farm Insurance Co.--which do not distinguish between large cars and small when charging for liability coverage.
State Farm Recently Lowered Some Charges
Allstate’s change comes on the heels of a State Farm announcement that it would charge the owners of some big cars less for medical coverage, the portion of a premium that pays for injuries to the insured driver and any passengers. State Farm said last week that owners of 36 models, including some of the largest and most expensive vehicles on the market, would receive a discount on medical coverage premiums while hundreds of other vehicles, including popular cars like the Toyota Camry and Ford Taurus, could be charged more based on how the vehicles protect occupants in crashes.
State Farm has said repeatedly that it has no plans to change the way it charges for liability coverage, however. State Farm spokesman Dick Luedke said the company has found that SUVs are involved in fewer crashes, which more than offsets the greater damage they do when involved in collisions.
Rates Unlikely to Change in California
It’s unclear whether California will be affected. The New York Times reported that Allstate is now applying the new rates to 2000 model-year vehicles in Oregon, Florida, Illinois and Louisiana, and has received approval in 13 states to impose the rates on 2001 model-year vehicles.
Officials from Allstate could not be reached for comment Saturday.
Candysse Miller, executive director of the trade group Insurance Information Network of California, said she did not know of any recent filings by Allstate or any other insurance company that would change their liability premium structures. Miller noted that Allstate recently lowered its rates in California, making it unlikely that the insurer would request to raise or change rates significantly.
The New York Times also reported that Progressive Corp., which insures about 4 million vehicles, was planning to join Allstate in raising its liability rates to reflect the greater damage caused by SUVs in crashes. But a Progressive spokeswoman said the company is one of the few that already bases liability rates on the size and safety record of vehicles.
“We’ve been doing that since 1983. Nothing has changed,” said Progressive spokeswoman Leslie Kolleda.
Insurers have long used their own claims databases to determine rates for two other portions of auto insurance coverage: collision insurance, which covers damage to the insured driver’s car, and comprehensive coverage, which pays for theft and damage caused by weather, falling trees and the like. Cars like the Camry and Honda Accord typically are charged more for comprehensive coverage, for example, because they are favorite targets of thieves.
But basing liability rates on the insured’s experience with a vehicle has been more controversial. Consumer activists charge that many insurers have been unwilling to charge SUV drivers more because the companies did not want to alienate affluent drivers.
