You could be paying hundreds of dollars more each year for auto insurance than your next-door neighbor, even if you drive the same kind of car.
A 36-year-old married man who lives in Aurora and has a clean driving record can pay as little as $110 a year for liability insurance or as much as $1,017, according to sample premiums for a 1997 Ford Taurus compiled by the Illinois Department of Insurance.
The range is even more dramatic in Chicago, where rates are higher. The same liability coverage can be as low as $197 a year or as high as $1,902 in the 60625 ZIP code on the Northwest Side.
Among the five largest auto insurers in Illinois–State Farm, Allstate, Country Mutual, Illinois Farmers and American Family–there is significant cost difference. Country Mutual is the lowest in Aurora at $202 a year, and American Family is highest at $372. In northwest Chicago, Country Mutual charges $414 and American Family $635.
“Illinois is an open competition state where we do not regulate rates, and there can be a wide cost difference among companies,” said Department of Insurance spokeswoman Nan Nases. “It’s worthwhile to check several companies because rates vary quite a bit.”
The department records premiums from the 360 insurance companies licensed to cover automobiles in the state and posts them on its Internet site (www.state.il.us/ins).
“We caution people not to use it as their only basis for selecting a company.” Nases said. “It is a good starting point to get an idea of the price variance from company to company. You should also talk to people you know to find out how a company services its policyholders. You want to be sure the agent you’re dealing with is accessible.”
The premiums compiled by the insurance department for liability, which protects the car owner in lawsuits against injuries or damage they cause, are for the minimum amounts required in Illinois: $20,000 for injuries per person, $40,000 for injuries per accident and $15,000 for property damage (expressed as 20/40/15 by the insurance industry).
Most insurance agents and consumer advisers recommend $100,000/$300,000/$50,000, which costs more.
All the quotes on the state’s Web site are for a 1997 Ford Taurus GL and rates will be higher for more-expensive cars, sports cars and sport-utility vehicles. Rates are given for four drivers, all with perfect driving records. Besides the 36-year-old married man, there are rates for a single man and a single woman, both age 20, and a 16-year-old boy who drives occasionally.
Premiums are listed for 13 locations in the state: three in Chicago (Northwest, West and Southwest Sides), Aurora, Joliet, Waukegan and seven Downstate cities. Premiums can vary in other locations and for other drivers.
The state’s Web site also lists premiums for damage to your car–collision and comprehensive–which state law does not require, but lending institutions and leasing companies usually do.
Among the top five insurers, who write nearly 60 percent of the auto policies in Illinois, Country Mutual is lowest in Aurora for physical damage at $248 and American Family is highest at $619. On the Northwest Side, Country Mutual charges $589 and American Family $1,153.
Premiums for physical damage are all over the map. In Aurora rates are as little as $171 a year or as much as $2,210; the Northwest Side ranges from $68 to $4,741.
How can the cost vary so much for the same coverage?
Dick Rogers, assistant director of the insurance department, says companies with extremely high or low premiums may not be active. Some may write policies in rural Downstate Illinois but not the Chicago area.
All 360 companies licensed in Illinois have to provide premium quotes to the department and update them when their rates change.
“I’ve never heard of some of them,” Rogers said. “We’re aware of about 30 to 40 companies that are actively participating in the marketplace.”
Companies that charge the highest premiums tend to be what the insurance industry calls “non-standard,” or high-risk, insurers. They accept drivers with at-fault accidents and traffic violations.
The lowest rates are usually from companies that take only those who have spotless driving records, such as Country Mutual.
J. Robert Hunter, insurance director for the Consumer Federation of America, says whatever their driving record, people who don’t shop for the best price will likely pay more than they have to for insurance.
“Insurance has a funny impact on consumers,” Hunter said. “They’re both intimidated and bored by it at the same time. Many just go to an agent and say, `Take me. I’m yours.’ “
When Hunter was insurance commissioner for Texas five years ago, he invited 30 drivers to a shopping experiment. All 30 brought their latest insurance bill with them, and, after reading the state’s guide on shopping for insurance, they called other companies to compare premiums.
After one hour, they saved an average of $120 per year on their auto insurance, Hunter said.
“Consumers forget that they should shop around,” said Jayna Neagle of the Insurance Information Institute, an organization funded by the insurance industry. “Because the companies are state-regulated, they think they all charge pretty much the same, but that’s not true.”
Premiums vary so widely because companies set rates based on loss experiences, Neagle said. Companies that have high losses in a location will charge more, and those with fewer and smaller claims will charge less.
Insurance companies generally set rates by ZIP Code, and rates are higher in cities than suburbs. State law requires Chicago be treated as one rating territory for bodily injury liability, so insurers must charge the same premiums in Hyde Park as they do in Lincoln Park.
Premiums for the property-damage portion of liability coverage, and all other forms of auto coverage, vary by neighborhood. Allstate, for example, charges $628 a year on the Northwest Side for collision and comprehensive on a 1997 Taurus and $844 on the Southwest Side.
A good time to shop is when the annual premium renewal notice arrives, which spells out coverage and cost. Having a current bill makes it easier to compare companies.
Neagle suggests comparing rates from major brands and independent agents. Consumers should ask friends and relatives about the service they receive.
“You never need insurance when something good happens,” she said. “If you’re going to have to use your insurance, it’s because something bad has happened, so you want to go to someone you feel good about dealing with.”
Hunter, however, says agents are “middlemen” who add to the cost of insurance by charging a commission. He favors direct-marketing companies, such as GEICO and USAA, reached through toll-free telephone numbers instead of a local agent.
State Farm and Allstate are the two largest auto insurers in Illinois with about 33 and 12 percent of the market, respectively, and are available through agents who sell only that brand. Independent agents usually sell several brands, such as American Family, Safeco and Economy Fire & Casualty, and can provide quotes from more than one company.
The National Association of Insurance Commissioners warns that independent agents might try to steer consumers to a company that pays them the highest commission instead of the insurer with the lowest premium, so it recommends consulting more than one.
To be eligible with some companies, consumers might have to meet requirements. USAA, for example, is open only to active and retired military personnel and their families.
Country Mutual, the third largest in Illinois at 6.5 percent of the market, is affiliated with the Illinois Farm Bureau, but you don’t have to be a farmer to get insurance. In Cook County, the Farm Bureau offers associate membership to non-farmers for $20 a year.
Illinois Farmers Insurance, the fourth largest, is part of the California-based Farmers Insurance Group and not connected to agriculture.
Many insurers operate under two or more companies with different rates. For example, State Farm Mutual covers drivers who have clean records for at least three years and has lower rates than State Farm Fire & Casualty, which covers drivers who have had tickets or an accident.
The sample premiums collected by the Department of Insurance are not available in a printed format, so the Internet is the only way to see the whole list.
Shoppers can obtain one or two quotes by calling the department’s consumer office at 312-814-2427 in Chicago or 217-782-4515 in Springfield. The office also can verify if a company is licensed in Illinois, explain different kinds of coverage and provide the number and type of complaints consumers have filed against a company. The same information is on the Web site, which also has an electronic form for filing complaints.
Other sources for auto insurance information are available. The Illinois Insurance Hotline (800-444-3338), based in Springfield and funded by insurance companies, produces a brochure that answers general questions.
The Insurance Information Institute (www.iii.org) operates the National Insurance Consumer Helpline (800-942-4242) and produces a brochure for consumers. The Insurance News Network (www.insure.com) has shopping advice and consumer news.
Nases said even after consumers investigate several sources, they should talk to an agent before making a decision.
“It’s really a good idea to have an in-depth discussion to make sure everything you want covered is in fact covered,” she said. “Don’t assume that you are getting the coverage you want.”
