Online Auto Insurance: Claim-Cost Booklet at Center of Federal Bill

Members of the U.S. House of Representatives Monday passed legislation that nixes a federal requirement that all automobile dealers distribute a booklet comparing claims rates and costs for individual vehicles, highlighting the existence of the publicly available document that can be used by consumers to gauge possible coverage costs, according to Online Auto Insurance.

HR 5859 eliminates a federal mandate requiring sellers of new cars to keep printed copies of the "Relative Collision Insurance Cost Information" booklet on hand for consumers who ask for it. The booklet, which contains the latest information on claims costs by vehicle make and model, will still be available for those seeking that information about auto insurance online through the National Highway Transportation Safety Administration (NHTSA) and the Highway Loss Data Institute (HLDI).

The information contained in the booklet is based on data from the HLDI that compares average claims rates and sizes for new car models with the average for all cars.

The publication has been distributed by federal officials since 1991, but, in a House report issued earlier this month, the administration recommended not requiring the booklet because "a prospective buyer does not need a brochure from the federal government to obtain this information, since insurance agents are trained to provide advice" about how car models impact the cost of coverage.

In June, a federal subcommittee heard testimony from congressman Mike Kelly and Jack Fitzgerald, a car dealer based in Maryland. Kelly, who has experience in the vehicle sales market, said he could not remember one customer asking for the publication.

Fitzgerald cited a National Automobile Dealers Association survey showing that 96 percent of its dealerships reported never having been asked by a customer to see the document.

Also, the use of car models in analyzing collision loss data is ineffective for consumers whose policy rates are based mostly on demographic factors, including their location and cost of their car, according to the report.

"Though these rankings provide an indication that one model will have a higher collision insurance premium than another, a prospective buyer still must consult an insurance agent to determine how much the premium will differ according to that person's specific personal information (e.g.: age, driving record, miles driven, home location)," the administration said.

The legislation also pushes NHTSA toward reviewing how it informs consumers about car damage, requiring that the agency conduct a study into "the best way to get information to consumers about the likelihood of a vehicle being damaged in an accident," according to the House report.

The bill now heads to the U.S. Senate for further consideration.

For more on this and related issues, head to http://www.onlineautoinsurance.com/ for access to an easy-to-use quote-comparison generator and informative resource pages.