The less money you make, the more you're likely to pay ... The less money you make, the more you're likely to pay for your car insurance, according to a new study. (AP photo).
Pride yourself on being a safe driver? You might be paying a penalty for that distinction.

The country's largest auto insurers often charge safe drivers more money for their annual insurance premiums than their more reckless counterparts, according to a study released Monday by the Consumer Federation Of America.

Even if they have better driving records, researchers found that drivers in lower-and-middle income brackets were charged higher premiums than well-to-do drivers in 66 percent of the cases studied. We're talking more than pocket change. In more than 60 percent of cases studied, the safer driver was charged at least 25 percent more than the one with a checkered driving record.

"What our research at this time, and our earlier reports, show is that this is not a free market at all," said Stephen Brobeck, executive director of the CFA. "It's a very uncompetitive market."

Rather than basing premiums on driving records and distance driven, Brobeck said insurers based their quotes on non-driving factors like education, occupation and home-ownership status.

Researchers checked prices in 12 U.S. cities. In each case, they had two hypothetical 30-year-old female customers living on the same street in the same middle-class Zip code.

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One was a single receptionist with a high-school education who rents an apartment, has not carried insurance for 45 days and has never had an accident or moving violation. One was a married executive with a master's degree who owns a home, had continuous insurance coverage and had an at-fault accident with $800 worth of damage in the past three years.

In every city, Farmers, GEICO and Progressive quoted the safe driver a higher premium than the one who had an accident. In some cases, companies refused a quote for the good driver but provided one for the one with an accident on her record.

One notable exception: In all 12 cities, State Farm charged the good driver less. In six cases, State Farm offered the lowest quote; in the remaining six, it offered the second-lowest price.

Bob Hunter, the CFA's director of insurance and a former Texas state insurance commissioner, said the system is set up for failure. Forty-nine states mandate drivers carry minimum liability insurance – the rate varies state to state – but he said insurance companies aren't interested in selling base policies because there are higher profits found elsewhere.

He said a policy that covers most states' requirements should cost in the $300 to $500 per year range. Often, the study found, insurance companies are charging more than $1,000, sometimes more than $2,000 and "rarely," less than $500.

Most of the insurers don't ask specific income information, Brobeck said, but that the other variables, such as marital status, education level and home ownership status serve as proxies for income. He called on insurance companies to be more transparent with the public in how they weight formulas that produce their quotes.

"State insurance regulators should require auto insurers to explain why they believe factors such as education and income are better predictor of losses than are at-fault accidents," Hunter said. "Policymakers should ask why auto insurers are permitted to discriminate on the basis of non-driving-related factors."

The CFA is a non-profit association of more than 250 consumer groups established in 1968 to research and advocate on consumer issues.

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