Allstate’s latest program ties driving records to homeowners rates

Insurance watchdog groups are crying foul over a new program by Allstate Insurance that uses your driving records and vehicle-claims history to determine how much that you’ll pay for a particular homeowner’s policy.

Consumer advocates say it’s crazy for insurance companies to believe that bad drivers are more likely to have something bad happen to their homes. But that’s the premise behind Allstate’s House and Home policy, which is being sold in Oklahoma and will expand to other states through 2014, according to a Chicago Tribune story.

Allstate says the program is designed to reward good drivers with lower homeowners rates, but it also means that those who get speeding tickets or cause an automobile accident could see their homeowners rates increase. According to the Tribune story, Allstate insists that a strong link exists between your driving record and the likelihood that you’ll file a claim on a homeowners policy.

But Bob Hunter, who is Director of Insurance for Consumer Federation of America, says no such correlation exists. We’re baffled by Allstate’s claim, too. How does causing an automobile accident make it more likely that your home will suffer roof damage because of a storm?

We asked Allstate to show us the research that validates its claims, and we’re still waiting. In addition, we have no idea what percentage of House and Home policyholders have lower rates because of good driving records.

The Tribune story reported that Allstate officials told company investors last week that the House and Home policy will generate additional revenue. That’s no surprise to Hunter, who says the new program is just another sales gimmick to get those who have auto insurance with Allstate to buy a homeowners policy, too.

It’s uncertain whether other insurance companies that sell auto and home policies will follow Allstate’s lead. But Hunter says that when an insurance company introduces new programs that help them to sell more policies, “other companies follow suit for fear of losing business.” For instance, insurance companies increasingly use credit scores to determine homeowners rates, which we wrote about in “Premium Games: Paying More and Getting Less,” in the November/December 2010 issue of Consumers Digest.