Car insurance isn't one of those things that you can skimp on. You need to ensure that you have minimum coverage (at least!) and that you never allow your insurance to lapse. Unfortunately, for Los Angeles residents, car insurance can come with quite a hefty price tag attached to it.
A recent survey by the Consumer Federation of America (CFA) evaluated car insurance costs, and the findings were shocking. According to the report, "good drivers—those with no accidents or moving violations—who live in moderate-income areas" are sometimes being charged over $1500 each year—for minimum liability coverage. This number is sky-high and doesn't bode well for those drivers who are still struggling to make ends meet in today's economy.
The CFA reviewed rates from the websites of major auto insurance companies Allstate, GEICO, Progressive, and State Farm (which serve 48% of the car insurance market in the country) in fifteen cities including Los Angeles, Boston, Denver, and Atlanta. According to the report, 56% of the quotes obtained were a minimum of $1000, and 32% of the quotes were at least $1500.
The most boggling part of it all is that the quotes ranged so greatly from company to company; for example, one female driver's quotes ranged from $762 to $3390 for exactly the same coverage. One L.A. female driver's quotes were much more reasonable, ranging from $600 to $800. However, for one male driver residing in L.A., the cheapest quote was $841 from GEICO, while the highest was State Farm's outrageous quote of $2278. Additionally, the report showed that there were more quotes at $3000 and over than there were quotes under $500.
These wide ranges—and high costs—aren't easily explained. Even CFA Executive Director Stephen Brobeck doesn't understand it; as he stated, "It is difficult to understand how insurers can justify charging more than $1000 a year for minimum coverage to drivers who have perfect driving records for many years. It is also difficult to understand why the same driver is being quoted rates from different insurers that vary so considerably. Insurers say rates reflect risk and cost, but if this in fact is the case, why do their assessments of these factors differ so radically?"
So the next time you're wondering why there are so many uninsured drivers on the busy roads in L.A., think about this study. As the CFA stated in their report, "The high premiums and disparate treatment help explain why an estimated one-quarter to one-third of lower-income drivers are uninsured."
But the good news (in California, anyway) is that there's a minimum liability insurance program available for low-income drivers totaling a very reasonable $300 per year. If only other states would take California's lead and make similar types of programs available.
However, the CFA is hoping that their report will cause state commissioners to address the issue; the study is being sent to all state insurance commissioners along with a plea for the commissioners to perform their own research to find out on their own "if low- and moderate-income drivers, with good driving records, are being charged rates that are high, unfair, and not affordable."
Until a change is made, you can do the following to get the lowest car insurance rate possible:
- Research! Don't accept the first quote you get. Get on the internet and request quotes from as many car insurance providers as you can.
- Ask about discounts such as the good student discount, the bundling discount (where you get multiple types of insurance through one provider), and the defensive driver discount. Most major insurance providers offer them.
- Consider raising your deductible. Increasing your deductible could actually save you hundreds of dollars each year. It's worth looking into.
- Work to improve your credit score (which affects your insurance rate).
