A study by the CFA (American Consumer Federation) reveals that Progressive, Allstate and Farmers regularly charge drivers with low mileage identical fees to drivers with high mileage. In a statement to the press, the CFA said that big auto insurance firms often forgo rewarding low mileage drivers, even though these drivers are proven to make fewer claims. Actually, most of the five biggest insurers frequently offer no concessions to these drivers at all. The CFA compared quotes given for 20,000 and 5000 miles driven annually, and discovered that Allstate, Farmers and Progressive invariably quoted identical annual premiums for these distances.
The conclusion drawn by J. Robert Hunter, the CFA’s Insurance Director (who used to be the insurance commissioner for Texas), was that properly rewarding people for driving less would carry many advantages. For one thing, it would reduce their auto glass insurance fees. In addition to this, it would result in fewer uninsured drivers, air pollution, accidents and a more positive environmental impact. Yearly mileage is quite unique as a variable in windshield insurance pricing, in that it is firmly linked to accident claims and also regarded as reasonable by the majority of Americans. Interestingly, the CFA also discovered that State Farm was the only big insurer that regularly rewarded low mileage drivers – charging anything from three percent to twenty percent less to this demographic.
Insurance Claims and Mileage
The CFA reports that there is a clear correlation between lower mileage and the number of insurance claims. Insurers are said to recognize the link between losses and mileage. As part of an earnings call in May 2015, Matthew Winter (the Allstate President) mentioned that the reason for increased losses and claims was mainly due to driver mileage. Referencing numerous studies, the CFA states that data strongly suggests a relationship between smaller insurer losses and lower mileage, based on a reduced frequency of claims.
Michigan Low Mileage Insurance Practices
Hunter recommends that other states should take a leaf out of Michigan’s book, and require that car insurance firms properly incorporate mileage as a factor into their fee structure. The insurance code in Michigan rules that the quantity of miles traveled by a car insurance customer should be taken into account, when a car insurance firm is calculating what to bill the customer for cover. All car insurance policies have to be based on the average mileage driven yearly, weekly or both.