Not-At-Fault Accidents Costing Drivers

A disturbing report from the Consumer Federation of America (CFA) revealed that Americans who were involved in not-at-fault accidents (being hit by another vehicle) are experiencing large premium increases despite no fault of their own, and increases are higher for lower-income earners.

The report examined data from 10 cities: Atlanta, Baltimore, Chicago, Jacksonville, Jersey City, Los Angeles, Kansas City, Minneapolis, Oklahoma City, and Queens, NY. It found that drivers in eight of the 10 cities experienced premium increases after a not-at-fault accident, with New York, Baltimore and Minneapolis all raising premiums above $200 (New York's went up $401).

“Innocent drivers who don’t cause accidents should not be charged more because someone else hit them,” J. Robert Hunter, CFA’s director of insurance said. “Most people know that if they cause an accident or get a ticket they could face a premium increase, but they don’t expect to be punished if a reckless driver careens into them.”

Source: Consumer Federation of America

The Big 5 Insurers

The study, that looked at the five big automobile insurance companies; Allstate, Farmers, GEICO, Progressive and State Farm found four of the five increased premiums after not-at-fault accidents with Progressive Insurance at the top with an average increase of 16.6% (Flo, we trusted you!). State Farm was the only insurance company not to apply not-at-fault premium increases. (Further reading: How to Find the Right Car Insurance)

Economic Factors Matter

Even more disturbing, the CFA found that premiums for low-income drivers rose the most. The CFA gathered data in each city for two female drivers of the same age, living at the same address, with the same car and mileage, with the only difference being economic factors: Moderate-income earners experienced, on average a $208 increase after a not-at-fault accident. while higher-income drivers got a $79 increase. “We already have a severe problem in this country because so many Americans live in communities where auto insurance is unaffordable,” Douglas Heller, an insurance expert who conducted part of the research said. “State leaders should at least prevent insurance companies from punishing good drivers for having the bad luck of being in the vicinity of someone else’s bad driving.”

The Bottom Line

Two states – Oklahoma and California – have banned the practice of increasing premiums for not-at-fault accidents. In 2009, Florida refused to extend the bans for existing customers to new ones. The CFA has called on drivers to ask their insurers what their policy is and push for these changes in their state. Letting insurance companies know that State Farm does not increase for these incidents is a good starting point.

“Diverse states such as Oklahoma and California have banned the practice. A little push from consumers could persuade other states to do the same," the report said.