Progressive Auto Insurance raised my premium 40% since I opened too many credit cards
 

My policy is coming up for renewal. No changes to the policy, no tickets, no address changes, no accidents...nothing. However my premium went from $640 to $908 which is a 40% hike. I've had Progressive Insurance for 13 years now.

Confused I called up. After speaking to two reps I finally got my answer: your credit has changed. Which is ironic since my credit score has actually gone UP nearly 25 points (750 to 775). I've never had a single late payment in my life. My credit has never been better.

So I dig into the document. Progressive starts everyone with a score of 100, the lower the better. I had 20 points subtracted for various good things - no late payments, ect. However I had 15 points added due to opening new accounts. Good right?

Well not good enough. I was dinged since I've opened "4 or 5 loans or accounts opened in the last 12 months". I've opened four credit cards and done a refi on my place in the last 12 months. That's it. One credit card every three months. Opening those four cards was enough for me to drop out of that perfect tier and cause my premium to rise 40% a year.

I could have had two speeding tickets and my premium wouldn't have been raised this much.

Anyone else experience the same thing?

Mine went up by $150 despite not having any accidents . I did an online quote with geico and it was over $120 less so I switched . When I called they said they were raising everyone's policy in Florida due to the fact that the company lost too much money this year due to fraudulent claims and others
I told progressive geico had given me a much lower quote and they said they couldn't price match . Oh well I am happier with geico

Yes. Geico has better customer service

You don't have to put up with that. If you decide to switch, it would be nice if you could send a concisely worded letter to that effect. If only for the catharsis of it.

One thing about USAA is that they tend not to play this game-- but they outsource their motorcycle insurance to Progressive.

So for laughs about five years ago, I inquired about liability only coverage on a Suzuki SV650-- Progressive wanted $5K a year. On a bike that costs $6-7K new.

A local broker gave me the same coverage for $600.

Ever since then, I've had no interest in Progressive as a company...

Glad that in California (where I live) that the insurance companies can not use credit scores to determine insurance rates. I have one homeowner's insurance outside of Calif (TX) and they use credit as one factor to determine rates. My rates for the TX homeowner's policy is pretty decent in spite of having only a "fair" insurance credit score. (my FICO's are excellent: well above 750, over 800 this past June)

My FICO's in mid June (when I started my 3 refi's on my rentals) were 804 for the mid bureau score. (Experian). My insurance credit score was only in the fair category and got even lower with all the refi's and CC's recently showing in my account.

The insurance credit score in my case is not relevant. In 37 yrs of driving, I only had 2 accidents (no claim paid out in 1977 due to being very minor--$20 of damage! and in 2006, there was $2700 damage to my car that the other party paid for since I was not at fault). No moving violations ever in 37yrs of driving.

I only had one minor homeowner's claim in 1988 when I bought my first house. (claim was <$1000). I presently own 4 rental houses and bought/sold several other houses over the years.

Bottom line: My low insurance credit score is not relevant because I had very few claims. I'm glad that California doesn't allow insurance companies to use credit scores to determine insurance rates. California passed a proposition that where a person lives can not determine auto insurance rates. Mine auto/homeowners rates stayed low throughout the years because of other factors that seem more relevant than using credit score, etc.

Not to be an apologist for the insurance companies, but they do not set rates on anecdotal stories of good drivers.

Younger drivers pay more. I never had a speeding ticket / claim in my first 10 years of driving. Does this mean the data showing young drivers are a bigger risk is wrong? Of course not.

Insurance companies rate people with what they measure as bad credit because that group of people has shown to be more expensive to insure, just like young men.

California passing legislation to limit what can be measured in determining insurance rates means one group will pay less at the expense of the other group that will pay more , the second group being less likely to make claims.

I am in Florida and they told me the same thing about fraud and increase in premiums. But the premium was still less than the other companies. two tips:

1) Instead of renewing your policy, just get another quote and they will give you $50 off for online quote

2) I opted in for Snapshot and they give me 27% off after 1 month!

Actually USAA has done exactly the same thing to me as the OP. I opened four new CCs in a year and have a FICO around 810. No refi here though, and no claims ever on any policy. They jacked up my car and home insurance dramatically and I'm shopping for a new insurer.

Progressive once decided my fiance was my 16 year old daughter, raised my rates and withdrew the next quarter's premium. :td:

"Do you not have the money to pay the new premium?"
"Uh - that's not the point. She's not 16. She's not my daughter. I did not authorize this withdrawal."
"What would you like for me to do?"
"Cancel this coverage."

Switched to State Farm, never looked back.

The other thing that annoys me is that all three companies--State Farm, Progressive, and Geico--litter the airwaves with commercials 24/7. Television advertising isn't cheap so this is where a lot of your premiums go.

And then USAA, which doesn't advertise (much), hardly beats them on price.

Usaa also pays their employees more and issues a yearly dividend to their insurance holders

USAA is probably the only company mentioned here that's actually responsive in a meaningful way to customer feedback. The few issues I've had with them over the years have always been addressed in a very human way.

you shouldn't have given your SS number to them in first place!

They say it is optional but will help you get better deal if your score is good but it is all bul****!
I have never entered my SS number on auto insurance purchase!
I pay $307 for 6 month with geico, 20$to $40k bodily injury, uninsured coverage, property damage 20k, got road hazard included, $250 comprehensive deductible, $1k collision deductible !


switch to another like geico or national wide or etc!
Choose PLEASURE when it asks what you use it for
enter 0-5K annually mileage driven

YOUR RATE WILL BE bit lower

USAA was far better (and cheaper) before they expanded eligibility. Now they're the same as any other company imho.

People think they're clever by cheating their insurance company. It works until it doesn't. And it doesn't when there's substantial claim, e.g. personal injury. Their experts will investigate, and determine that you lied on your application and your coverage will suddenly be zip, zilch, nada. And you'll deserve every bit of it.

That's pretty anemic coverage.

Sure, but it depends upon what his or her needs are, too. If I have a car I never drive (as I do) because I spend all of my time out of town, the legal minimums are fine for me.

It only takes one accident to lose everything you've worked hard to earn over the years. I would really reconsider your coverage if i were you regardless if you dont drive the care that much. A better metric would be how much do you have to lose, example if your a college student with no wealth or assets than the state minimum might be okay for you to get by but if you have assets and some wealth accumulated then you definitely want to increase coverage.

I assure you, I'm not exaggerating. This car hasn't moved in 18 months. :)

Wirelessly posted (BlackBerry8530/5.0.0.1030 Profile/MIDP-2.1 Configuration/CLDC-1.1 VendorID/417)

But when you go out of town, do you rent cars? And if so, are you relying on your personal auto insurance for third-party liability coverage?

In order, "not usually," "no, I have primary rental coverage via my Amex Platinum," and "the vehicle I actually use primarily is a motorcycle, and that's got much better liability insurance on it."

what i need the most was comprehensive coverage , car can be broken into, rain, hail, tree, drop on windshield etc!
other than that, since i am defensive and safe driver, I don't get into any accidents and never had any accidents for the past 9 yrs or so

i am smarter than you are:)

Wirelessly posted (BlackBerry8530/5.0.0.1030 Profile/MIDP-2.1 Configuration/CLDC-1.1 VendorID/417)

AFAIK, your Amex Platinum only provides coverage for loss or damage to the rental vehicle, not for damage to other vehicles or for injuries to third parties. (I think that the UK-issued USD Amex Platinum is an exception, and does provide liability coverage also.)
Does the liability coverage on your motorcycle extend to other vehicles rented by you? If not, you'll be stuck with the (usually) paltry minimum liability coverage that the rental company provides, unless you: 1) purchase SLI from the rental company; or 2) have a separate, non-owned auto liability policy.

But is it fair to make someone pay more because they are part of some arbitrary "group" that is more expensive to insure? Especially when their membership in that group is not within their control? If they can charge more to young men, then why can't they charge more to blacks, for example?

I have a good credit score, but I don't think it should affect insurance coverage, even if there is some statistical correlation.

Not sure if charging someone more is fair or not, but the people in that group are statistically more likely to cost more in claims, so insurance companies charge them more. No idea if insurance companies are able to charge more or less based on race, but they can based on gender and age.

If insurance companies are unable to charge more to people more likely to have more/more expensive claims, then everybody else will pay more for the high risk people.

Insurance companies do not really care why the correlation is there, they just want to identify them to be able to manage them.

Wrong, what you need most is liability coverage. Regardless if you are a safe driver or not accidents happen. Just because you have not had an accident in the past 9 years that does not exempt you from the possibility of having one in the future. It always amazes me how misinformed people are about simple finance and risk management concepts. Call you insurance agent and ask him/her what it would cost to increase your liability coverage, in most cases it is very inexpensive and worth every single penny.

Apologist for insurance companies? Nah!

My degree is in mathematics. I started out to be an actuary. (An actuary is the bookie for an insurance company.) The first two actuarial exams are really just the GRE for undergraduate math. Easy.

Subsequent exams are in insurance law. Suddenly I realized I would have to face my then newborn son telling him, "What your daddy does for a living is cheat widows and orphans."

Building chemical weapons would be a more ethical career.

An update:

I called today. No luck getting the premium back down to $640. They run credit every 36 months.

One thing that did change was they updated was the age I opened my first account. It went from a credit card loan at 21 to an auto loan at 18. That was enough to lower the premium from $908 to $750.

I'm 35 now and by lowering the age at which I got my first loan by three years was able to reduce my premium 18%. Insanity.

The rep I spoke with said that the more accounts one opens the more likelihood one would file a claim.

Basically if you open four or more accounts in 12 months you get dinged. Three or less is considered average and you don't get penalized for it.

Please tell us you're shopping around. I want to be righteously indignant on your behalf.

Do you mind sharing what state you live in? Thanks.

Absolutely. Have a quote with Geico at $602

Washington

ofcourse i have liability coverage too, how can i have full insurance without having the basic, state required minimum liability coverage?

You have very low liability coverage. It would be EASY to exceed your limits quickly.

Absolutely not true regarding the voiding of coverage. The only way they can void the coverage is by showing that they would have not written you had they known the truth. They can go back and charge you the difference between the correct and incorrect premium.

What happens is that the rating factor that is being lied about starts becoming less and less of an indicated reduction (vs. baseline) and everyone pays more.

It is not legal to unfairly discriminate, which means that you cannot use race as a rating variable. By law. That doesn't mean you can't discriminate, you just can't unfairly discriminate (which means race, religion, etc.).

However, to extend that to any subgroup means that everyone would be paying the same. When that happens you get picked off by the competition - how do you think State Farm got to be so big. Everyone was charging the same rate statewide for auto, then State Farm decided rural drivers were less risky and targeted them with lower rates. Easy pickings for them. The rest of the companies were saddled with urban drivers at inadequate rates.

Your missing the point, as someone else already posted you can easily exceed your state minimum coverage and when that happens say goodbye to your savings, credit, home equity etc. My state requires 25k/50k but I hold 300k/300k and also have a million dollar umbrella policy in addition. I think I pay about $100 bucks a year more for the higher coverage and $180 a year for the umbrella policy but that's a very small price to pay to insure I dont lose everything just because of an accident... As my insurance agent tells me " buy the insurance or own the loss"

Moderator observation
 

Discussion of the relationship between credit card churning and insurance premiums is relevant, but discussing insurance applications, coverage or rates is off-topic. In particular, please do not advise others on the amount of insurance they need nor on ways to reduce premiums.

I hope this post will be considered on-topic in light of Mia's admonition.

I am a credentialed property-casualty actuary with 35 years of experience, including 10 years in personal auto. Let me offer some information.

I will use the term "credit scoring" even though it is technically inaccurate, the proper term should be "insurance scoring." Companies use their own scoring models, some use proprietary models, some purchase models from companies such as Fair-Isaac.

Progressive was one of the first companies to use credit scoring. I was able to get a copy of their credit model in the late 1990's. It was about 700 pages long, and it was printed on white paper in pale blue ink. This led me to believe that it had been filed with a state insurance department under their rating laws, and under those rating laws anyone can come and inspect and copy rate filings. However, documents printed in this way won't copy. They had other documents submitted that were in dark red ink on a black background, which likewise wouldn't copy.

If you go back 30 years, you would find that if you called an insurance agent or company out of the blue for a quote, you would invariably get their worst rate. Companies would have 2, 3, 5, or more rate plans filed, ranging from "Super-Preferred" to "Substandard." In order to get a better rate, they basically wanted to meet you and size you up. Although the rate was fixed based on variables such as age, sex, marital status, geographic location, type of vehichle, and driving record, assignment to a rate tier was discretionary. Basically it was the right of State Farm Mutual to say "We choose not to sell you a policy" while State Farm Fire & Casualty, a separate company, to say "We will sell you a policy."

Credit scoring is what allows companies to quote you on the internet. This is their way of "knowing you." It has led to a quantum increase in the aggressiveness of companies writing personal lines. Among the top-tier companies, there is fiece competition for who can build the best scoring model.

One thing I found weird (I have not been heavily involved in this line since the late 1980's) was how every company could advertise "Drivers who switched saved $x." Obviously, not every company could have lower rates than every other company, and the qualifcation "Drivers who switched" is a key one. I pinged an old friend who does this stuff a lot, and he said yes, there is enough variation in the models used by different companies so that there can be a pocket of people who are paying GEICO $1000 who State Farm will insure for $600, and vice versa.

No one knows exactly why credit scoring works, but we know that it does. As actuaries, we are agnostic to the reasons. We don't really care, frankly, if we knew that blue-eyed people have lower claims that green-eyed people, we'd be find on a blue eyes discount. We don't press for rating based on race or religion, but if it were legal, we'd be fine with it.

The Federal Trade Commission did a major study, which is considered as the more or less defniitive answer in this area, it is at http://www.ftc.gov/os/2007/07/P04480...nce_Scores.pdf. Roughly speaking the conclusion is that credit scoring works, but no one knows why.

In general, the credit models are trade secrets. Even if you try to look online and you know what to look for and how to read it, you usually can't find it. For example, in Florida, all rate filings are posted on the internet, and if you look at the GEICO filing you will find something like 25 rate bands, but now policies are assigned to rate bands is protected as a trade secret.

If you really care enough to know what the actuarial profession thinks about risk classification, you can see the Statement of Risk Classification Principles at http://actuarialstandardsboard.org/p...dices/risk.pdf. However, that represents the profession's view and not necessarily those of insurance regulators, "consumer advocates," or insurance companies.

I can share that 30 years ago we had profound frustration about the primitive state of auto insurance rating. For example, at the time, a Chevy Malibu and Chevy Camaro were rated the same, because they cost the same. We did a study at the company I worked for at the time, finding that one of the biggest predictors of claims was axle ratio. I don't even know what axle ratio is, but I think the lower the axle ratio, the higher the accelration. We also found some counter-intuitive results, like that policies with one driver and two cars had higher losses tha those with two drivers and two cars. Why? One-driver policies were unmarried people and two-driver policies were married people, and the effect of marital status was greater than had been recognized. However, we often mused about finding better ways. Annual mileage was a seemingly useful variable, but surprisingly hard to collect accurately. What if we could measure acceleration? Left turns? Hard braking? Usage at really late hours, or at rush hour? Dreamers, weren't we? Those of my generation look wistfully at Progressive's "snapshot." To us, what is most appealing about that is that it has the potential to actually CHANGE driver behavior. Not just to move the costs around from driver to driver, but to make everyone a less accident-prone driver.