Renters Pay More than Homeowners for Auto Insurance

Major auto insurance companies charge good drivers as much as 47 percent more for basic liability auto insurance if they don’t own their home, according to a new analysis of premiums released this week by CFA.  Based on a sampling of insurance quotes across the country for a 30-year old safe driver, CFA found that premiums averaged seven percent higher – about $112 per year – for drivers who rent instead of own homes.

The practice disadvantages low- and moderate-income Americans, according to CFA.  Federal Reserve Board data show that the median income of renters in the U.S. was $27,800 in 2013 compared with $63,400 for homeowners. “To raise people’s auto insurance premium because they can’t afford to buy their homes unfairly discriminates against lower-income drivers,” said CFA Insurance Director J. Robert Hunter. “A good driver is a good driver whether she rents or owns her home.  Insurance companies should not be allowed to target people based on homeownership status.”

For the analysis, CFA tested rates for minimum limits liability coverage in 10 cities from the nation’s largest insurers – State Farm, Geico, Allstate, Progressive, Farmers, Liberty Mutual, and Nationwide.  CFA used company websites to solicit two premiums in each city for a 30-year old female motorist who has a 2005 Honda Civic and a perfect driving record.  The only characteristic that was altered during the testing was whether she owned or rented her home. While the average increase for renters was six percent, there were several double-digit percentage increases around the country.

“Using customers’ homeownership status to determine premiums is another way in which insurance companies are piling on lower-income Americans,” said Douglas Heller, a consumer advocate who worked with CFA Research Advocate Michelle Styczynski to analyze the data in the study.  “With all these different rating factors that have nothing to do with driving, auto insurers are charging good drivers hundreds and sometimes even thousands of dollars extra just for being poor.”

 

Bill to Protect Kids from Nicotine Poisoning Signed Into Law

In a victory for children’s safety, President Obama signed the Child Nicotine Poisoning Prevention Act into law last month. The law requires that liquid nicotine containers used for e-cigarettes and other vaping devices use child-resistant packaging. The liquid nicotine in these containers is highly toxic, and just one teaspoon can be fatal for a toddler.

In a joint statement, Consumers Union, Consumer Federation of America, and Kids in Danger commended President Obama and Congress for their work in enacting the law. “Requiring liquid nicotine containers to be child-resistant is an important first step to address the safety hazards of these products,” the groups stated.  “We look forward to working collaboratively to implement this new law and take other necessary steps to keep kids safe.”

“This will help to ensure that children will not be able to access dangerous liquid nicotine. There is much more to do to protect consumers from this hazard but this is a critical step.” said CFA Legislative Director Rachel Weintraub.

Title Lenders Replace Payday Loan Stores, Trap Arizonans in Debt

Since expiration in 2010 of an Arizona law authorizing payday lenders, title lenders have saturated Arizona neighborhoods, selling loans at up to 204 percent annual interest, according to a report released last month by CFA and the Southwest Center for Economic Integrity (CEI).

The report, Wrong Way: Wrecked by Debt/Auto Title Lending in Arizona, found that by mid-2015 100 companies were licensed by the Arizona Department of Financial Institutions to make title loans at 633 locations, a 300 percent increase in less than a decade. Twenty companies with almost half the licensed title loan locations also offer “registration” loans, which are similar to payday loans, at the same rates as title-secured loans, the report found.

Under the Arizona Secondary Motor Vehicle Finance Transaction law lenders are authorized to charge 204 percent for loans of $500 or less, with tiered rates for larger loans to 120 percent for loans over $5,000.  These loans are renewed an average of eight times, resulting in $765 in finance charges on a $500 loan for total repayment of $1,265.  For larger, longer-term loans, consumers pay thousands of dollars to pay off loans and recover their titles.

The report recommends:

• Repeal of the Secondary Motor Vehicle Finance Transaction law and regulation of all lenders under the Consumer Lender law, which includes a 36 percent annual interest rate cap and stronger supervision and protections.

• Strong payday and car title loan rules by the Consumer Financial Protection Bureau to require ability-to-repay determination for the first and every loan made by title lenders.

• Investigation and enforcement of state and federal laws by the Arizona Attorney General, the Arizona Department of Financial Institutions, CFPB and the Federal Trade Commission.

“While action from the Arizona legislature is necessary to protect Arizona consumers, the Consumer Financial Protection Bureau must also issue a strong rule this year to stop the worst abuses in the payday and title loans industry here and in other states,” stated CFA’s Financial Services Fellow Jean Ann Fox. “Arizona consumers have waited long enough for relief from debt trap lending at triple digit rates.”

 

USDA’s Poultry Standards Improve Food Safety but More is Needed

The U.S. Department of Agriculture released final standards earlier this month for Salmonella and Campylobacter in ground poultry and poultry parts. Members of the Safe Food Coalition commended these actions, which are estimated to prevent 50,000 illnesses a year. However, the Coalition also called on the Department to build on these standards by taking a tougher stance overall on the presence of drug-resistant Salmonella in food, and to conduct a thorough review of its microbial sampling methods to ensure that industry processing techniques do not hamper the agency’s ability to detect Salmonella.

“These new standards are a welcome step that will better protect the public from dangerous foodborne illness,” the groups said in a press release. “Salmonella and Campylobacter cause millions of illnesses every year, yet progress on reducing the number of infections has been stalled for over a decade. These standards will help to address an antiquated testing protocol and shine a light on companies that need to clean up their act.”

Under the new standards, FSIS will conduct a follow-up investigation of an establishment with large numbers of positive samples, but not necessarily demand that the company recall contaminated product. “These new standards will make significant progress, but they leave an important loophole in place,” said CFA’s Director of Food Policy Thomas Gremillion.  “FSIS still needs to declare certain antibiotic resistant serotypes of Salmonella to be adulterants, as our colleagues at the Center for Science in the Public Interest have petitioned it to do. The Coalition also supports the ‘Pathogen Reduction and Testing Reform Act of 2015,’ legislation introduced by U.S. Representatives Rosa DeLauro and Louise Slaughter, which would direct the Secretary to declare such dangerous pathogens adulterants.”