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State Farm discounts
SUVs, trucks

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From staff and wire reports

CHICAGO -- State Farm, the nation's largest automobile insurer, plans to scrap its across-the-board discount for all vehicles with air bags and instead offer staggered rate cuts for vehicles it says are the safest -- including big cars, pickup trucks and some sport utility vehicles.

The change would result in no more than a $50-a-year difference in insurance costs, State Farm said.

Officials at State Farm in Hawaii said the discounts will be offered locally beginning Jan. 1. State Farm insures roughly 117,000 vehicles in the state, about one out of every five.

Consumer safety experts immediately criticized State Farm's move today, saying it will penalize drivers of smaller vehicles who may not be able to afford large ones and are more likely to be hurt in a crash.

But the Bloomington, Ill.-based insurer said its new pricing program, which discounts the medical portion of coverage by up to 40 percent, accurately reflects its safety data. It will cut rates for vehicles that generate the fewest injury claims for occupants. The medical portion of coverage accounts for only 10 percent to 20 percent of the average policyholder's total premium, State Farm said.

"This is not about big cars and little cars, it's about safer cars," company spokesman Dick Luedke said. "Cars that produce the fewest injuries are the type of car you shouldn't pay as much to insure."

Along with some larger models, including SUVs and pickup trucks, big autos such as some Acuras, BMWs, Mercedes-Benzes and Jaguars also fall under that category. The insurer has for years given discounts of up to 30 percent for vehicles with both driver and passenger air bags. The discount is offered to owners on the portion of their premium covering personal injuries to occupants.

Since all cars now have air bags, State Farm decided to base the rate discount on which makes and models generated the fewest injury claims from accidents. Those vehicles will receive the biggest discount, 40 percent. Vehicles with air bags that offer the least protection to occupants will receive 20 percent discounts. These vehicles tend to be smaller, like the Ford Contour, Chevrolet Cavalier and many popular Japanese models.

Vehicles that generate injury claims in the mid-range will receive a 30 percent discount.

J. Robert Hunter, director of insurance for the Consumer Federation of America, called the pricing plan unfair to most drivers. "If I have a tank, I'll get the biggest discount," he said. "But I'll be smashing into people, killing and maiming them at a much higher rate than if I were in a smaller car."

Research has shown that light trucks, including SUVs and pickups, are more likely than cars to kill the other driver in a crash. Trucks tend to weigh more, have higher hoods and stiffer frames than cars.

State Farm sees no reason to increase its insurance fees for the liability portion of coverage, however, because its database shows that large vehicles are involved in fewer crashes.

"While it is generally true that when a big car hits a little car it is going to inflict more damage, what we have found is that accidents involving bigger cars tend to be less frequent," Luedke said. "So the increased severity is offset by the decreased frequency."

While some SUVs qualify for the highest rate discounts, other popular models do not, including the Ford Explorer, Nissan Pathfinder, Jeep Cherokee and Chevy Blazer.