How Do You Know If Your Auto Insurer Charges Too Much?



Maybe you don’t let your dog get behind the wheel. But does your auto insurer charge you as though you might actually let your dog drive?


The price of auto insurance always seems a little mysterious. We know we need it. So we get it and generally continue to renew with the same insurer year after year. But the Consumer Federation of America (CFA) shook things up recently when it revealed that your insurance may be based on factors other than your driving record. It wants state insurance commissioners to ban this new practice.


The CFA found some of the most popular insurers use what the companies call “marketplace considerations,” and “price optimization” to charge customers more money, knowing they’re unlikely to shop around.




The consumer watchdog group sites a rate filing by Allstate in Wisconsin that breaks down how it assigns policy holders to these complementary groups, and then determines premiums that CFA claims range from “. . . a 90% discount off the standard rate to increasing his or her premium by 800%, depending upon Allstate’s analysis of the individual policyholder’s marketplace considerations.”


CFA sent letters to all U.S. state insurance commissioners and asked them to review whether Allstate and other insurers filed rate increase plans that include price optimization. CFA’s J. Robert Hunter, a former Texas insurance commissioner, wrote, “CFA believes price optimization will always result in unfairly discriminatory pricing that is illegal everywhere.”


Maryland has asked insurers to revise their plans if they use rate optimization and the CFA asks other states to do the same.



1. Ask your insurer if the company uses price optimization or market considerations.  If the answer is yes, it’s a clue that you may be paying too much because your insurance bill is based on things other than your driving history.

2. Comparison shop.


Don’t be afraid to switch insurers.


Published by

Barbara Nevins Taylor

As the winner of 22 Emmy Awards and a slew of journalism honors and awards, I created to give you the straight story about complicated stuff. Tell us what you want to know and we'll get you the answers.