Study: Safe drivers may be hit with auto insurance rate hikes

Safe drivers in the Twin Cities and several other markets are often getting hit with unfair insurance rate hikes, a consumer watchdog group claims.

In Minneapolis, drivers found not at fault in an accident were still hit with penalties averaging 8 percent rate increases, according to a study from the Consumer Federation of America.

However, the insurance industry says the study is flawed and shouldn't be believed.

The CFA solicited auto insurance quotes in 10 metro areas. The group compared quotes for hypothetical drivers never involved in accidents and drivers in accidents for which they were not at fault.

In the Twin Cities, the organization said it found Geico and State Farm did not quote higher rates for drivers in accidents the drivers did not cause.

However, Progressive and Farmers did increase rates, said Doug Heller, who helped CFA conduct the study.

Minnesota does not forbid rate hikes for drivers who were not at fault in an accident.

Some in the insurance industry, though, say the findings shouldn't be trusted.

"We think that the study is really overly simplistic and consumers really need to know the specifics of their circumstances and bring that to the attention of the companies," said Dave Snyder, a spokesman for the Property Casualty Insurers Association of America. "There may not well be the kind of surcharge they're talking about, depending on the circumstances."

The CFA says the biggest hits for innocent drivers came in Queens, New York: $401 on average. In Atlanta, the typical hike was $60.

The hikes are a double-whammy for moderate income drivers because their rates are generally higher than high-income drivers, CFA says.

But insurers says such surcharges are unlikely to happen, especially if the accident victim's insurance company makes no payout.

Mark Kulda, a spokesman for the Insurance Federation of Minnesota, said a hike rate might occur for an innocent driver hit by someone without insurance.

"Then your own coverage might have to pay the claim and if it does then you are subject to potentially being surcharged," Kulda said.

Insurance industry and other sources have estimated that 10 to 20 percent of Minnesotans drive without insurance.

Kulda also said the quotes obtained by the CFA are of limited value because they're not necessarily in line with the premiums people actually pay.

The Minnesota Department of Commerce says it's is examining how auto insurance rates are set.