$4 GALLON GAS SHOULD LOWER AUTO INSURANCE RATES
FOR MANY CONSUMERS
--Consumers Who Are Driving Less Should Contact Their Insurance Companies--
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Washington, D.C. – As the price of gasoline tops four dollars a gallon nationwide, the Consumer Federation of America (CFA) today released an analysis showing that consumers who are driving less could save an average of 5 to 15 percent on their automobile insurance rates –about $47 to $142.1 (Potential average savings by state are shown below.)
While skyrocketing fuel costs have created great hardship for many consumers, these increases could mean immediate savings on automobile insurance as drivers react to high gas prices by using mass transportation, car-pooling, taking fewer trips to the store or curtailing their vacations.“Auto insurance rates are partially based on how much you drive and how you use your car,” said J. Robert Hunter, Director of Insurance for CFA and former Texas Insurance Commissioner and Federal Insurance Administrator. “If you drive less to save money on gas, these driving changes might mean that you qualify for immediate insurance rate relief,” he said.
“We encourage all Americans to act now to save money by calling their insurance company or agent and asking if they qualify for an immediate rate reduction.”
CFA released the attached “Consumer Alert” that detailed several ways that Americans
who are driving less can save money on automobile insurance, including:
If You have Stopped Driving Your Car to Work or School:
• Your insurance classification has changed from “Drive to Work” to “Pleasure.”
• Savings could be 10 to 15 percent.
If You are Driving Only to a Train or Bus Station, Not All the Way to Work or School:
• Your insurance classification may change from the “Drive to work” mileage category.
• Savings could be 5 to 10 percent.
If You Have Consolidated Trips and are Driving Much Less:
• This reduces your miles driven per year.
• Savings could be 5 to 10 percent.
1 The average auto insurance premium in the U.S. was $949 in 2005, according to the latest data from the National
Association of Insurance Commissioners (see attached table showing state data). These are average savings. Based
on the specifics of a consumer’s auto insurance, the savings will range from zero to hundreds of dollars.
2
“While these savings will vary based upon the specific auto coverage you have, it is certainly worth a call,” said Hunter. “Simply explain the actions you are taking to drive less and estimate how many fewer miles you are driving a month,” he said. “Tell the agent or company representative that you want the cheapest rate they have for drivers reflecting your new driving circumstances.”
In a letter sent earlier this week, CFA has called on the nation’s Governors to act immediately to require insurance companies to lower their rates as Americans drive less. “As Americans drive less because of the price of gas, fewer claims will be filed with insurance companies,” said Hunter. “Whether this will mean windfall profits for insurers or rate cuts for the consumers is up to Governors and state regulators to determine,” he said. “We ask that each state immediately call hearings to determine the right auto insurance prices under the changed driving situation.”
Bloggers Note-As this is a Kentucky Insurance Blog I have edited this list to include only Kentucky, and a few surrounding states
STATE 2005 Combined Savings Savings Savings
Average Premium at 5% at 10% at 15%
Arkansas $852.62 $42.63 $85.26 $127.89
Illinois $830.69 $41.53 $83.07 $124.60
Indiana $758.47 $37.92 $75.85 $113.77
Kentucky $898.01 $44.90 $89.80 $134.70
Missouri $804.53 $40.23 $80.45 $120.68
North Carolina $730.75 $36.54 $73.08 $109.61
Ohio $754.86 $37.74 $75.49 $113.23
Tennessee $787.73 $39.39 $78.77 $118.16
Virginia $795.92 $39.80 $79.59 $119.39
West Virginia $1,028.05 $51.40 $102.81 $154.21
Nationwide $948.97 $47.45 $94.90 $142.35
Source: 2004/2005 Auto Insurance Database Report,
National Association of Insurance Commissioners, 2007.
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Consumer Federation of America (CFA) is a non-profit association of 300 consumer groups,
with a combined membership of more than 50 million people. CFA was founded in 1968 to
advance the consumer’s interest through advocacy and education.
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