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The "Farmers Insurance Newsalert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group, including fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources are sited.

 

Thursday, March 14, 1991
Home Edition
Section: PART A
Page: A-3

Homeowners' Insurance Cost Varies Widely;
Consumers: Garamendi says state survey shows residents should shop around for best deals. Insurers say costs between communities differ because of such factors as crime and fire protection.

By: PAUL FELDMAN
TIMES STAFF WRITER



Urging California residents to "shop around" before purchasing
homeowner insurance policies, state Insurance Commissioner John Garamendi
Wednesday released a statewide survey spotlighting dramatic price
differences between identical policies offered by the state's 26 largest
insurance companies.

The survey also revealed major price differences between identical
policies purchased in various communities and regions of California. San
Diego boasted the lowest average price in the state--$439 compared to
$553 in the greater Los Angeles-Orange County region. The highest prices
were generally found in poorer, inner-city communities--$652 in Compton,
for example.

Garamendi said the study did not deal with such provocative issues as
discrimination or differences in service among insurance companies.
Rather, he said, the report was intended only to make clear that
consumers can benefit by comparison shopping.

"It's quite possible in Glendale to purchase a policy at twice the
cost of another," said Garamendi, elected last November in the first race
for the state post. "The message to consumers . . . is be a wise shopper,
shop for price, shop for quality and service, but be sure to compare."
Industry spokesmen said the results were not surprising, given the
varying levels of service provided by competing companies. Costs between
communities vary, they said, because of such factors as crime and fire
protection.
"If companies were overpricing," asserted Richard Wiebe of the
American Insurance Assn., "the competitive market would insert another
player into the market who would take the business."
Garamendi's survey, which also looked at renter and earthquake
policies, made comparisons based on a $150,000 policy for a wood-frame
home built in 1950 with a $250 deductible. Contents in the home would be
insured for $75,000.
The cheapest policies across the state--averaging $412 to $420--were
written by 20th Century Insurance Co., Cigna Group and CNA Insurance
Cos., Garamendi said. On the top end--with prices ranging from $606 to
$714--were Century-National Insurance Co., Royal Insurance Group and
Chubb Group of Insurance Cos.
Of the three firms that write approximately 50% of all homeowner
policies in the state, Allstate averaged $522, State Farm averaged $526
and Farmers Insurance Group averaged $555.
Garamendi said the wide range in prices reflected a lack of comparison
shopping by residents across the state.
"The market is not a perfect market," he told a Los Angeles press
conference. "Consumers are not aware of the great price disparities that
exist.
"When consumers are well informed," he added, "you'll see a narrowing
of the range."
But industry spokesmen were quick to challenge the thesis.
"We have always encouraged consumers to shop around for the best
possible deal," said Wiebe, whose organization represents 220 insurance
firms. "But not only from the standpoint of price but from the standpoint
of service."
New Jersey-based Chubb, for example, specializes in expensive
properties and sends an agent to the premises to suggest methods for
avoiding fires and burglaries, Wiebe said. 20th Century, on the other
hand, does most of its business over the phone from referrals, resulting
in low advertising and sales costs.
"If you were going to buy a car, you can buy a stripped-down Chevrolet
or you can buy a Mercedes-Benz," said Chubb spokeswoman Mary Lu Korkuch.
"Someone might say you're getting ripped off buying a Mercedes, but it
depends on what you want."

In Garamendi's survey, the lowest prices after San Diego's were in the
Central California region that includes Ventura and Santa Barbara
counties. The average there was $496. Prices in the San
Bernardino-Riverside County area averaged $502.
Within the greater Los Angeles-Orange County area, average prices
ranged from $421 in Mission Viejo and $425 in Huntington Beach to $607 in
Inglewood and $674 in West Hollywood.

Across the Southland, some carriers offered prices $100 to $200 lower
than the average.

In Van Nuys, for example, a 20th Century Insurance Co. premium would
cost $390--compared to a Van Nuys average of $572.
Earthquake policy rates also varied between firms by as much as $1.75
per $1,000 of insurance. For example, Resident Mutual Group's rate of
$1.25 in Alhambra was far better than the average of $2.08.
CALIFORNIA HOMEOWNER INSURANCE RATES 1991
Regional average, in premium dollars per year, by county.
A. Greater Los Angeles / Orange County: $553
B. San Bernardino / Riverside: $502
C. San Diego: $439
D. Central California: $496
E. San Francisco / Bay Area: $523
F. Sacramento: $555
G. Northern California: $557
Statewide: $518

A statewide survey released by Insurance Commissioner John
Garamendi shows costs for homeowner insurance vary widely from region to
region and from one company to another. Figures below are the average
annual premium, by company, for a $150,000 homeowner policy on a basic
wood-frame dwelling. Categories A-G below correspond with regions
indicated in chart above.
COMPANY REGIONS
A B C D E F G
20th Century Ins. Co. $419 $433 $358 $411 $415 $428 $422
Cigna Group 472 347 352 391 451 441 446
CNA Ins. Companies 481 398 354 391 443 440 433
Prudential of America 489 484 390 441 465 494 473
Residence/Western Grp. 507 456 382 464 466 505 535
Ohio Casualty Grp. 440 455 411 457 505 526 545
Transamerica Corp. Grp. 529 458 467 446 474 493 482
Continental Ins. Cos. 598 392 315 457 585 495 511
Fireman's Fund Ins.Cos. 478 479 416 444 492 554 557
Auto Club of S. Cal.(AAA) 548 524 441 452 NA NA NA
Home Ins. Company 519 471 373 498 488 575 567
Safeco Ins. Companies 560 455 457 435 524 521 550
Liberty Mutual Ins.Cos. 525 530 447 482 489 538 491
California Ins. Grp. 600 405 490 483 513 562 581
Allstate Ins. Grp. 541 512 406 521 518 608 551
State Farm Grp. 546 607 481 485 494 552 518
Aetna Life & Casualty 562 538 439 522 561 518 542
Republic Financial Serv. 566 481 477 514 545 565 566
Reliance Grp. Inc. 606 499 481 491 553 570 581
ITT Hartford Ins. Grp. 630 585 453 495 537 571 569
Farmers Ins. Grp. 592 571 496 561 532 581 549
Farmers Home Grp. 553 467 449 597 536 621 676
CA State Auto Assoc.(CSAA) NA NA NA 592 560 587 578
Century-National Ins.Co. 599 620 509 617 554 663 682
Royal Ins. Grp. 700 633 581 640 697 715 718
Chubb Grp. of Ins. Cos. 788 750 557 621 702 762 821
REGIONAL AVERAGE 553 502 439 496 523 555 557
COMPANY
State
20th Century Ins. Co. $412
Cigna Group 414
CNA Ins. Companies 420
Prudential of America 462
Residence/Western Grp. 473
Ohio Casualty Grp. 477
Transamerica Corp. Grp. 478
Continental Ins. Cos. 479
Fireman's Fund Ins.Cos. 488
Auto Club of S. Cal.(AAA) 491
Home Ins. Company 498
Safeco Ins. Companies 500
Liberty Mutual Ins.Cos. 500
California Ins. Grp. 519
Allstate Ins. Grp. 522
State Farm Grp. 526
Aetna Life & Casualty 526
Republic Financial Serv. 531
Reliance Grp. Inc. 540
ITT Hartford Ins. Grp. 549
Farmers Ins. Grp. 555
Farmers Home Grp. 557
CA State Auto Assoc.(CSAA) 579
Century-National Ins.Co. 606
Royal Ins. Grp. 669
Chubb Grp. of Ins. Cos. 714
REGIONAL AVERAGE 518
NOTE: Central California region includes, among others, the cities of
Oxnard, Santa Barbara, Fresno and Bakersfield.
NA: Coverage not available.
Source: California Dept. of Insurance


GRAPHIC-TABLE: CALIFORNIA HOMEOWNERS INSURANCE RATES 1991
GRAPHIC-CHART: CALIFORNIA HOMEOWNERS INSURANCE RATES 1991
PHOTO: State Insurance Commissioner John Garamendi

Type of Material: Includes List

Descriptors: INSURANCE INDUSTRY -- CALIFORNIA; HOMEOWNERS INSURANCE; INSURANCE RATES; STATISTICS

Copyright (c) 1991 Times Mirror Company

 

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