Curbing Auto-Insurance Premiums

April 27, 1990

Report Outline
Special Focus

Introduction

Across the country, consumers are increasingly confused, if not outright angry, about why their auto insurance rates keep rising. The insurance industry argues that rates are high because of escalating auto-repair charges, medical-care costs and attorneys' fees. Insurers say the best way to control costs is to replace the current liability system with no-fault coverage, in which drivers limit their ability to sue in exchange for lower rates. However, critics say there are many steps the industry could take right now to bring rates down, and some even question whether no-fault plans really would reduce costs.

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Overview

Motorists across the country are fuming about automobile insurance rates, and no wonder. Policyholders see little logic or fairness in many of the criteria insurance companies use in setting rates. And they cannot understand why the cost of auto insurance consistently outstrips increases in the overall Consumer Price Index. In some urban areas, a young male driver may have to pay more for insurance coverage than his car is worth on the resale market.

Some motorists charge that good auto insurance is hard to find at any price. They complain about companies that renew a policy as long as the driver's record is unblemished, but that raise the premium sharply or cancel coverage altogether in the event of an accident or a couple of speeding tickets. To make matters worse, when those drivers look for replacement policies, they find that other companies often hold cancellation or non-renewal, for whatever reason, against them.

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