Associated Press (AP) says that consumer safety experts have criticised State Farm Insurance, the largest automobile insurer in the US, following announcement on Tuesday (28/11/00) of plans to scrap across-the-board discounts for vehicles fitted with air bags and instead offer staggered rate cuts for vehicles it says are the safest. These include big cars, pickups and some sport-utility vehicles.
The change would result in no more than a $US50-a-year difference in insurance costs, State Farm said.
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According to AP, consumer advocates retorted that the move will penalise drivers of smaller vehicles who may not be able to afford large ones and are more likely to be hurt in a crash.
But State Farm said its new pricing programme, which discounts the medical portion of coverage by up to 40%, accurately reflects its safety data. It will cut rates for vehicles that generate the fewest injury claims for occupants. The medical portion of coverage accounts for only 10% to 20% of the average policyholder’s total premium, State Farm said.
State Farm has for years given discounts of up to 30% percent for vehicles with both driver and passenger air bags, reports AP. The discount is offered to owners on the portion of their premium covering personal injuries to occupants.
As all new cars now have air bags, the insurer decided to base the rate discount on which makes and models generated the fewest injury claims from accidents.
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