Car buyers with credit problems should avoid buying Your Choice car insurance at least according to one consumer group
We understand car insurance costs
At Auto Credit Express we can understand why poor credit auto loans typically come with higher (sometimes much higher) interest rates than conventional car loans. We also realize that in some states auto insurance companies can take a consumer’s FICO scores into consideration when pricing out policies – making them more expensive, as well, for consumers with credit issues.
But the fact is that if your credit is less than perfect and you’re on a tight budget, paying more than you should for car insurance simply because of the type of policy you have doesn’t make any sense at all.
So if you’ve had credit problems and you’re in the process of buying a car and picking the type of policy, you might be interested in a marketing decision that Allstate Insurance made in California two years ago.
Allstate Your Choice Auto insurance
According to a press release from the nonprofit group Consumer Watchdog, Allstate Insurance agreed to stop issuing new policies for its “Your Choice Auto” (YCA) insurance program in California in January of 2011 in response to a challenge brought by the consumer agency. At the same time Allstate also stated that it would be transitioning all current YCA policy customers into standard auto insurance programs by the end of the year.
This all came about because Consumer Watchdog challenged the marketing of YCA policies under California’s Proposition 103 that requires insurers in California to prove that their rates are not excessive and that their insurance products are legal.
According to Consumer Watchdog, the YCA program charged drivers up to 15% more in premiums while promising that future tickets or accidents would not increase the policy premium. But according to the nonprofit, the benefits were not worth the additional charge (the consumer group also found that during the time these policies were in force, Allstate pocketed $20 million per year in extra premiums).
In checking out the program it noted that Allstate was also “violating California’s good driver discount law, unfairly discriminating against drivers despite their good driving record, selling a deceptive product; and encouraging irresponsible driving.”
“Your Choice Auto became a cash cow for Allstate by charging customers more than they should be paying under California’s good driver law,” said Todd M. Foreman, in-house counsel for Consumer Watchdog. “Only when faced with the threat of having their executives cross-examined about the actual costs and benefits of YCA did Allstate finally agree to take this product off the market.”
Following a notice of hearing from the California insurance commissioner and the filing of testimony and exhibits by both Allstate and Consumer Watchdog, the insurer decided to withdraw the program rather than go through the hearing process. As of January 10, 2011, Allstate no longer issues new YCA car insurance policies in the California market. But the decision in California doesn’t affect similar YCA programs in the remaining states in which it’s sold.
According to Allstate spokesman Bill Mellander, the company will continue to sell these policies in other states and “is committed to the YCA product line. It is probably the single best example now of the innovations we bring to the marketplace.”
The Bottom Line
If, because of credit difficulties, you’re thinking of financing your next vehicle with a bad credit auto loan and you’ll also be shopping around for full coverage auto insurance, you might want to consider something other than an Allstate YCA policy.
If you currently have one, it certainly wouldn’t hurt to shop around for what might turn out to be a more affordable alternative. After all, if Your Choice was a bad choice in California, there’s a good chance that there are better choices where you live, as well.
Another thing: although car insurance companies in many states use credit scores to price their policies, this doesn’t mean you can’t shop around despite the fact that you have credit problems.
Finally, if you’ve been turned down for a conventional auto loan, it doesn’t mean the only alternative is a BHPH car dealer. That’s because at Auto Credit Express we match applicants that have experienced auto credit issues with dealers that can offer them their best opportunities for car loan approvals.
So if you’re ready to establish your car credit, you can begin now by filling out our online car loans application.