Illinois drivers may be paying higher auto insurance premiums due to factors unrelated to their driving records, according to a study released by the Secretary of State’s office.
The study, released by the SOS on April 16, was compiled using nearly 2,000 responses from Illinois residents and shows an 18% increase in local premiums in 2024 alone.
How do auto insurance companies generate rates?
Many factors can come into play when it comes to generating auto insurance policies, according to the study.
For example, a single policy can include multiple types of coverage and may include multiple vehicles, each with multiple insured drivers.
To calculate a total policy price, insurers typically generate prices for each vehicle individually, adding up the costs of each type of coverage for said vehicle.
This coverage cost is generated by starting with a base rate and multiplying it by factors to adjust the policy for risk. These multiplicative factors can include past accidents, potentially making a huge difference in rates.
What factors are Illinois auto insurers using to generate rates?
As mentioned previously, insurers use multiplicative factors to set rates, oftentimes resulting in widespread disparities.
These factors can include a driver’s credit, zip code and age, even when the driver has a squeaky clean record, according to the study.
“This study puts hard data behind what Illinois drivers have been experiencing for years – pricing practices that can penalize people for factors beyond their control,” Illinois Secretary of State Alexi Giannoulias said in a press release. “When safe drivers are paying more because of factors entirely unrelated to their driving record, it raises serious questions about fairness and transparency in the system.”
How can these factors impact a driver’s auto premium?
The study found that drivers with poor credit can pay more than 2.7 times as much in premiums as drivers with excellent credit for the same coverage.
Meanwhile, seniors with safe driving records can still face substantially higher rates – especially those over 65.
Similarly, drivers in certain zip codes can pay more than 2.5 times higher rates than those living in other parts of the state.
“I have a perfect driving record,” an Oak Forest resident told researchers. “No accidents in the past 25 plus years or more, no speeding tickets, DUI, moving violations, etc. My credit score is average. Why should my credit be predicated on my driving history?”
What is the Illinois SOS doing about it?
The study’s release comes as Senate Bill 1486 moves to the Senate for final passage.
If passed, the legislation would “strengthen oversight of insurance rates, prohibit unfairly discriminatory pricing and prevent insurers from shifting out-of-state costs onto Illinois policyholders,” according to the press release.
Co-sponsor of the bill Rep. Thaddeus Jones said in the release, “This study makes clear that the current system lacks transparency and accountability. It underscores why reforms like Senate Bill 1486 are necessary to protect consumers and ensure rates are fair.”
This article originally appeared on Journal Star: Have poor credit? It could be spiking your car insurance rates in Illinois
Reporting by Hannah Hudnall, Peoria Journal Star / Journal Star
USA TODAY Network via Reuters Connect
