State Farm, the biggest auto insurer in the US, is expected to announce that it
will reduce premiums for drivers of the biggest cars, trucks and sport utility
vehicles, The New York Times (NYT) reports.

The newspaper says the decision is based on claims data showing big vehicles
as the safest for passengers.

The NYT says the reductions will take the form of discounts on the medical
portion of coverage and may make a difference in annual premiums of no more
than a $US 50 per year. It says that overall insurance costs will remain more
expensive for drivers of big rather than small vehicles.

By ignoring the threat that bigger cars pose to smaller vehicles with its new
pricing structure -which will replace near-universal discounts for vehicles
equipped with air bags — State Farm has drawn criticism from consumer advocates
who called it unfair to a majority of drivers, the NYT says.

It reported State Farm chief actuary Gary Grant as saying that the company
was concerned about the disproportionate damage that big cars can inflict on
smaller ones. But he noted that claims records show that big cars are involved
in fewer accidents than smaller ones.

The NYT says that the biggest discount of 40% will go to drivers of big, expensive
cars, vans, pickups and sport utilities like the heavy, high-riding Chevrolet
Suburban, a number of Ford and GMC vans, two Ford pickups and some Acuras, BMWs,
Mercedes-Benzes and Jaguars.

However, those driving smaller vehicles such as the Ford Contour, the Chevrolet
Cavalier and many popular Japanese models will receive only 20% discounts on
the portion of their premium covering personal injuries to occupants, the NYT
says, noting that State Farm has for years given a 30% discount to any dual
airbag-equipped vehicle.

However, not all big vehicles will automatically get the biggest safety discount.
While State Farm does not deal specifically with the issue of SUVs that tend
to roll over, the NYT says, it does give several sport utilities, like the Mitsubishi
Montero [known in other markets as the Pajero or Shogun] and two-door Ford Explorer,
its lowest safety rating.

Initially, the discounts – which the NYT says are likely to be adopted by other
insurers – will be applied to about half the 37 million cars insured by State

The effect, the newspaper calculates, is that the owners of about 6.2 million
cars, or about a third of those to which the new price structure will apply
immediately, will pay 10 percent more for medical coverage; another third will
pay 10 percent less; and, for the final third, there will be no change.