Bigger cars get insurance break

Herald News Services

CHICAGO – The nation’s leading automobile insurer is revising its pricing policies and giving the biggest rate breaks to drivers of what it finds are the safest vehicles – primarily luxury cars, vans or SUVs.

State Farm said Tuesday the new system, which will replace its across-the-board discount for all vehicles with air bags, will result in no more than a $50-a-year difference in insurance costs. Owners of sport utility vehicles and big cars will still pay more for their insurance than small-car owners do.

The changes, which apply only to the medical or personal injury protection (PIP) portion of the premium, will result in lower rates for drivers of some larger vehicles, while penalizing drivers of many small cars.

“Larger vehicles tended to fare better than smaller ones,” said State Farm spokesman Dick Luedke, “but there were plenty of vehicles the other way.”

The discounts are for 2000 model year cars, and do not affect other portions of the premium, such as liability and collision and comprehensive coverage, which typically make up the bulk of the annual insurance cost. Total reductions of around $50 or less would be typical for the highest-rated cars.

But announcement of the change still provoked immediate criticism from consumer safety experts, who said it’s unfair to drivers of smaller vehicles who may not be able to afford large ones and are more likely to be hurt in a crash.

Imani Khayyuh, a Chicago motorist who drives a sedan that wouldn’t qualify for the biggest discount, also was displeased when informed of the plan.

“I shouldn’t be penalized for driving a sensible car,” she said.

The ratings reflect only the safety of the vehicle’s occupants, and do not include how occupants of other vehicles might fare in a multicar crash.

Experts said other insurance companies are likely to follow State Farm’s lead. Mike Trevino, a spokesman for Allstate, the second-biggest U.S. insurer, said it instituted a similar rate structure about a year ago.

But because the medical portion of coverage typically accounts for only 10 percent to 20 percent of the total premium, the change isn’t likely to have a huge impact on policyholders.

Insurers already consider the likelihood of a crash or theft when setting comprehensive and collision premiums.

Now a related but different consideration is being applied to medical payments coverage, Luedke said. “We’re not measuring ‘crashability,’ we’re not measuring ‘theftability,’ we’re measuring safety.”

J. Robert Hunter, director of insurance for the Consumer Federation of America, called the new pricing plan unfair to most drivers.

“If I have a tank, I’ll get the biggest discount,” he told The New York Times. “But I’ll be smashing into people, killing and maiming them at a much higher rate than if I were in a smaller car.”

The discounts, which go into effect Jan. 1, will be applied to about half the 37 million cars insured by State Farm – 1994 and later models, according to Luedke. The air bag discount will be phased out for 1988 to 1993 models.

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