Not owning a house can be expensive for your wallet later. Starting from the increment of rent to losing up the housing equity, and also missing out some major tax breaks like the mortgage-interest deduction can cost you a big. Being a renter, you'll lose all of these saving chances. One of those important expenses is high-cost insurance premiums for your auto/car insurance.
Being an owner, what an individual has to do with auto/car insurance? Of course, it does, when you are talking about the rates consumers pay off for auto/car insurance coverage, a new research analysis came to the scenario.
According to a recent analysis (2016) of premiums by the nonprofit Consumer Federation of America (CFA), currently, . It’s because those consumers are renting their home rather than having the ownership, even if these consumers have a good driving history.
In several markets, the difference is much heavier, and it totally depends on the insurer. Auto insurance premium average rate is 13% more for renters in Louisville, Ky, than the homeowners in that same area. Similarly, another insurer in that market, named “Farmers Insurance”, quoted 47% higher rate for an auto insurance premium.
As per the Consumer Federation of America (Washington, D.C), the top auto insurance providers levied 47% higher rate for basic liability auto insurance to the good drivers, who are living as renters. This extra percentage of the rate is charged to them even if they have perfect driving records, according to the CFA.
The gap of total average auto insurance premium rate between renters and owners is low, nearly as 7%. But the renters still have to pay $112 extra per annum approximately. It is because auto insurer companies marked those renters as per their ownership status and charge high premium rates.
Top insurance companies are getting unfair and discriminating against the low-income drivers who can’t afford to own a house, just to pull out a higher auto insurance premium, stated J. Robert Hunter, former Texas insurance commissioner and insurance director of CFA. He also stated that a good driver will always remain a good driver whether he or she owns a home or rents it. Insurance companies mustn’t target these poor people just because of their homeownership status.
Consequently, the CFA is influencing the state insurance commissioners to stop the unfair practices on the renters by charging them with higher auto insurance rates. Every driver in any state must have auto insurance, but insurance companies shouldn't force them to purchase a house for getting eligible for the best auto insurance rate. J. Robert Hunter also added that State Insurance Commissioners must look over that matter seriously and choose representatives who can take positive steps to save the renters.
To take advantage of the basic liability coverage, average renters are contributing 6% more than normal homeowners. But the necessary step has already been taken into consideration. The survey results from Oakland, California state law restricts the insurance companies to increase the rate of the premium amount by considering the homeownership status for auto insurance.
Allstate, an insurance provider, offered rates for renters way below than the national average. For example, . But, they also pushed the bar by 19% more than average for renters in Tampa.
Followed by the situation, many insurance companies increase their rates higher than the average when the driver is not a homeowner. As an example, Liberty Mutual normally charges 19% more than the average, Syracuse charges nearly 4% more, and Newark charges 26% more from the drivers who don’t own a house. The survey showed this scenario in the nine non-California cities. , .
What to do
For buying a home, a buyer must save up a handsome amount of cash in order pay the 20% of loan amount as down payment on a home loan. Average-income people may handle the monthly payments, but they might not be able to afford the initial fund for the down-payment.
That doesn't mean renters have to carry the huge premium rates on their shoulders and accept the unfair decision taken by the insurance providers. As a renter, it’s your duty to make sure you . All insurance provider companies have separate risk evaluation models, and each company has its own and different terms and conditions depending on the current/past situation of the consumer. So, their risk evaluation method may be different. By comparing quotes you'll be able to pick a provider that will evaluate your risk profile differently, and you get a lower rate as a driver/renter.
Unfortunately, one in 20 millennials does not understand what insurance is all about, and this age group often gets interested in renting rather than owning personal homes. Young renters, who are financially poor than older consumers, may lower their insurance cost by educating themselves; it’s surely a great way.