Insurance rates for sport utility vehicles, pickups rising Costly harm they inflict on cars in collisions cited

Insurance

October 17, 1997|By NEW YORK TIMES NEWS SERVICE

DETROIT -- Alarmed by research showing that sport utility vehicles and pickup trucks are inflicting unusually costly harm to cars and their occupants in collisions, some big insurers are raising liability rates on the oversize vehicles in what could amount to the largest overhaul of liability coverage since the rise of no-fault laws a quarter-century ago.

To convince auto makers that such vehicles must be modified to make them less dangerous, the insurers are also bankrolling new studies and planning an ambitious series of crash tests.

For motorists, the pocketbook effects of the overhaul of insurance rates could prove startling: a liability rate increase of up to 20 percent for drivers of sport utility vehicles and pickups over the next several years and a cut of up to 10 percent for car owners. That will likely mean an extra $50 to $700 a year in liability insurance payments for the first group, depending on current rates, and a savings of $25 to $350 for car owners.

Two of the nation's largest insurers, Farmers Insurance Group and Progressive Corp., have already begun changing the way they calculate their rates. Executives at Allstate, Nationwide, Geico and USAA said they are reviewing the issue but are unlikely to make any decisions until they have more data, including the findings of studies by industry groups to be completed by spring.

Actuaries for Farmers and Progressive said that the reason for their rate moves is simple: Their customers who drive sport utility vehicles and pickups have been incurring unusually expensive claims to cover the damage and injuries they inflict during accidents. Rather than continuing to spread the extra cost among all drivers, including car owners, these insurers are starting to set rates accordingly.

"It's pretty obvious the size and weight of these vehicles and the way they're built is contributing to the loss experience," said Jonathan Adkisson, an actuary at Farmers, the nation's third-largest insurer after State Farm and Allstate. "When an accident occurs, the heavier vehicles are more likely to inflict damage and injuries, and these result in larger claims, so it seems appropriate to charge the drivers of those vehicles higher premiums."

The biggest sport utility vehicles, like the Ford Expedition and the Chevrolet Suburban, weigh 5,200 to 6,000 pounds, while midsize sedans typically weigh 2,900 to 3,300 pounds. Sport utility vehicles also ride higher off the ground, so they tend to override the occupant protection features of cars and tend to have stiff frames that crumple the other vehicle in crashes.

Liability coverage applies only to property damage and injuries caused to others by the policyholder. Rates for collision coverage, which applies to repairs of a policyholder's vehicle, already take into account the fact that sport utility vehicles and pickups suffer less damage in crashes.

If the full liability rate increase goes into effect, drivers of sport utility vehicles and pickups will be paying substantially larger total insurance bills.

Two groups in Washington are working on studies that will include six to 10 crash tests pitting sport utility vehicles against cars. The tests are partly intended to press auto makers for better designs of large and small vehicles, so they're more compatible in crashes.

Pub Date: 10/17/97

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