At least two states already prohibit such penalties. Although drivers in eight of the 10 cities tested by the CFA could be surcharged if they were hit by another driver, CFA research found that consumer protections in California and Oklahoma prevented insurance companies from raising rates on drivers in those states when they were involved in an accident that was not their fault.

The CFA said that there were significant differences in the way the five companies CFA tested treated customers after accidents they did not cause. According to the CFA, Progressive used the not-at-fault penalty most aggressively, surcharging drivers in every test where such an increase was not prohibited by state law. GEICO and Farmers sometimes raised rates by 10 percent or more for not-at-fault accidents. Allstate occasionally penalized drivers who did not cause the accident, while State Farm never increased premiums for these accidents.

The CFA said that the increases charged for not-at-fault accidents varied from customer to customer even for the same company in the same city. CFA said that its research over recent years had consistently found that good drivers with certain socio-economic characteristics that suggested lower incomes generally paid more for auto insurance than higher income drivers with the same driving record. The CFS said that this pattern held when it came to penalizing drivers for accidents in which they were not at fault.

Comparing two good drivers, whose only differences reflected their individual socio-economic circumstances rather than their driving safety record, the CFA found the following:

- Higher income drivers paid $78 more on average after a not-at-fault accident;

- Moderate income drivers paid $208 more on average after a not-at-fault accident;

- Higher income drivers faced a 6.6 percent penalty on average after a not-at-fault accident; and

- Moderate income drivers faced a 9.6 percent penalty on average after a not-at-fault accident.

The CFA said that, excluding State Farm customers, who were never penalized, the average surcharges jumped to $99 (8.3 percent) for higher income drivers and $264 (12.1 percent) for moderate income drivers. 

The CFA said that, to test for the differing impact related to economic status, it sought quotes for two female drivers in each city who lived at the same address, were 30 years old, licensed for 14 years, and drove a 2006 Toyota Camry 10,000 miles each year. The drivers differed only in personal characteristics that the CFA said were correlated with income.

“We already have a severe problem in this country, because so many Americans live in communities where auto insurance is unaffordable,” said Douglas Heller, who conducted the research along with the CFA's Michelle Styczynski. “State leaders should at least prevent insurance companies from punishing good drivers for having the bad luck of being in the vicinity of someone else's bad driving.”

In a statement in response to the CFA report, Neil Alldredge, the senior vice president for state and policy affairs at the National Association of Mutual Insurance Companies, said:

The most significant news to come out of this CFA report is that it pays for consumers to shop around. NAMIC continues to have concerns about the CFA's methods and the conclusions they enable, but the report itself only underscores the fact that insurance rates can vary widely from company to company, based on how companies weigh the many different factors that are considered in determining rates.

Interestingly, the CFA report did not state whether any actual consumers are paying these rates, a key point given that the CFA doesn't factor in realities such as whether a consumer also purchased homeowners' or renter's insurance from their auto insurer, which for most policyholders would result in discounts. It's also noteworthy that the CFA's moderate income driver had carried no insurance coverage for six months, whereas its upper income driver had been insured continuously by the same insurer for three years. This is significant because some companies reward loyal customers by forgiving infrequent accident claims – a practice that belies the CFA's claim that insurers are trying to “train” their customers not to file claims of any sort.

Finally, we were not at all surprised to see that of the companies included in the CFA report, the only one that did not raise rates as the result of no-fault accidents was a mutual insurance company, which are historically known for their focus on performance and policyholder satisfaction.