Posted in Car Insurance Claims on February 12, 2020
Chances are if you live in Louisiana, you are already paying one of the highest auto insurance rates of any driver in the United States. In fact, Louisiana has the second highest auto insurance premium rate in the U.S. when ranked against other states with the average driver paying more than $2,000 annually for auto insurance. What you may not be aware of is that a low credit rating can have a serious impact on your insurance rates which can cost you thousands of extra dollars annually.
Drivers on Louisiana roads must have minimum levels of auto insurance. The mandatory coverage requirements are based on the weight of the vehicle you are driving. Optional coverage such as collision, fire and theft, uninsured/under-insured driver, are not mandatory. Many drivers opt out of this insurance because of the excessive costs of coverage, particularly if they own an older vehicle.
Most of us believe our insurance costs are directly related to only our driving record. When you are a safe driver, you have a clean driving record showing no speeding tickets, stops for driving under the influence, or being involved in an accident. Unlike many states, Louisiana does not have a points system, instead, they use The Problem Driver Pointer System (PDPS). Should you have a poor driving record in Louisiana or receive any citations in another state, they are contained in this system. However, this is standard since most DMVs use a point system of some sort which can result in license suspensions, or higher insurance premiums.
Louisiana insurance costs are more complicated and even a driver with a perfect driving record could potentially pay a higher premium than a driver who has a violation for driving under the influence of alcohol or drugs. While this may seem impossible, a news segment which was aired on CBS in the Morning in February of 2020 in their Consumer Reports segment shows the disparate ways those with lower credit scores are penalized in Louisiana.
Perhaps the most shocking information revealed in this report was that a driver with a clean driving record and an excellent credit score pays on average of $1,899 annually for basic mandatory coverage while a driver with a poor credit score pays $3,489 annually for the exact same coverage. This is a shocking variance especially when you compare that to a person with excellent credit who has a DWI conviction paying approximately $2,643. This information was also spelled out more thoroughly in an article published in the Bayou Brief in April of 2019.
The same article in the Bayou Brief also shows that on average, a driver in Louisiana with a poor credit score pays between 65 and 135 percent more than a driver with excellent credit. Insurers have previously stated drivers who have a poor credit score are more likely to file a claim which does not really make a lot of sense. Auto accident claims can only be filed following an accident – one’s credit rating does not have any correlation to whether you are involved in an accident.
Anyone who intends to register a motor vehicle in Louisiana should understand what factors go into determining your insurance premium. There are other factors which could result in a higher insurance bill, although most are not as onerous as the credit score model. Here are some additional factors:
While the Insurance Information Institute indicates race should never factor into the rates you pay for auto insurance, a study conducted of insurance coverage in four states, Texas, California, Illinois, and Missouri by ProPublica reveals in some communities, minority auto insurance rates were significantly higher than premiums for non-minorities with the same risk factors.
Insurance is a commodity and every consumer should expect to pay nearly the same rate for the same product. Two automobile owners who live on the same street, drive the same car, and travel the same basic number of miles but have disparate credit scores should still pay the same auto insurance rates. This expose shows this is not the case for drivers in Louisiana.
While legislators attempt to clear up these disparities in auto insurance rates between those with different credit scores, drivers in Louisiana still may have to fight their insurance company when they file a legitimate claim. Should you find your claims are being denied or you are facing challenges getting the insurance company to pay the full value of your claim, you should contact an attorney who has experience with unfair insurance practices, including bad faith claims.
Contact the Law Office of John W. Redmann, LLC at 504-500-5000 if you have any issues dealing with a legitimate claim with your insurance company. We can help if they are acting in bad faith and deny a legitimate claim or attempt to get you to settle your claim for less than you may be otherwise entitled to collect.