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Study: Safer Drivers Don't Always Pay Less

A consumer watchdog group says a high-school graduate with a blemish-free driving record will pay more for car insurance than a college-educated counterpart with a recent accident.

The Consumer Federation of America (CFA) compared rates from five car insurance carriers for two women, both 30 years old and living on the same street. But one driver was single, had a high-school education and rented a home. The other was married, had a master's degree and owned a home.

Each driver carried a black mark: The lower-income driver had a lapse in coverage of 45 days, and the higher-income driver had an at-fault accident with $800 in damage.

The CFA found that the safer driver -- the one with no accidents on her record -- would pay more for liability insurance in the majority of comparisons it ran for 12 cities. In most cases, the difference was at least 25 percent.

“State insurance regulators should require auto insurers to explain why they believe factors such as education and income are better predictors of losses than are at-fault accidents,” said J. Robert Hunter, spokesperson for the CFA and a former Texas insurance commissioner.

Insurance companies often offer lower rates or outright discounts to drivers who are married, own a home or work in a particular occupation. (See our Guide to Car Insurance Discounts.)

Why no insurance is worse than a minor wreck consumer analyst Penny Gusner notes that a lapse in coverage carries much more weight than a relatively minor accident. The $800 tally for the better-educated driver's accident is low enough to fall below many insurers' threshold for a rate increase, she says, but “a lapse in coverage is a big no-no.”

There may be benign reasons for a gap, such as a military deployment, she says, but insurers tend to look at the dark side.

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