Limits on Auto Insurance Rate Increases

Though individual insurance companies can set general auto insurance rates, with the highest on young drivers who have statistically been proven greater accident injury risks, most states prohibit them from automatically increasing policy costs for drivers simply because they’ve passed their fiftieth or sixty-fifth birthdays.

The recent lawsuit most relevant to issues of auto insurance costs for people over 50 is the 1993 Maryland appeals case GEICO et al. v. Insurance Commissioner.

Prompted by complaints from drivers that their automobile insurance premiums were skyrocketing when they reached their sixty-fifth birthday, the Maryland Insurance Division reviewed the rate filings of certain insurers, including GEICO. The state was looking for any signs that the rates violated Maryland insurance law, which prohibited “excessive, inadequate, or unfairly discriminatory” insurance rates.

GEICO grouped auto risks by various classifications, including age. The age classifications included: 50 to 64, 65 to 74, and 75 and over. GEICO gave each of these age groups a specific rating classification factor, reflecting the company’s applicable loss experiences. (The loss experience was based on risk indicators such as number and severity of accidents and the amount of paid claims.)

The risk rating increased as each group grew older. The rating for age group 65 to 74 was higher than that for age group 50 to 64.