Congress mulls what to do with those dusty insurance booklets

Christina Rogers covers VW and regulatory/legislative issues for Automotive News.

For 21 years, it's been the same drill.

U.S. regulators pull together data on insurance costs for all makes and models of cars, SUVs, light trucks and vans and compile it into a report made available to retailers.

And each year, dealerships are required to reproduce the info and have it handy in case a customer asks for it, which by the Department of Transportation's own admission, they rarely do.

That could soon change.

Today, the House passed legislation that would repeal a federal mandate requiring dealerships to keep these insurance booklets available or risk a $1,000 fine.

The National Highway Traffic Safety Administration, the agency charged with compiling the insurance report, estimates it cost taxpayers about $70,000 a year to make it available.

The rate estimates are based on data generated by the Highway Loss Data Institute, which ranks new cars on how much insurance companies typically pay out to repair a vehicle after a crash. The formula takes into account crashworthiness, as well as how susceptible the vehicle is to damage.

The booklets were originally intended to help buyers with purchasing decisions, giving them a sense of what their insurance premiums might look like.

But in a report to Congress in February 2011, NHTSA described them as "rarely used" and "not useful."

Collision repair costs are just one factor in determining insurance rates, and it's largely overshadowed by others factors, such as a driver's age, experience and location.

"A prospective buyer does not need a brochure from the federal government to obtain this information," the transportation department said.

The emergence of the Internet and the ability to call up insurance rates with just a couple clicks of the mouse make this requirement look even more like a fuddy-duddy.

Of course, the National Automobile Dealers Association has strongly backed the legislation, along with a number of other dealer trade groups.

In a survey this summer, NADA polled 800 new car dealers on the issue and found that 96 percent said they've never had a customer ask for the insurance booklet.

Jack Fitzgerald, owner of Fitzgerald Auto Mall in Kensington, Md., said he can't recall a single incident where he or a staff member has been asked to produce the brochure -- not in his 20 years of business.

He also said the way it's presented is confusing to customers, who are likely to think it's what they'll have to pay.

"It needs to be more sophisticated," Fitzgerald added. "At best, it's misleading to customers."

The bill goes to the Senate next, where a date has yet to be set on a vote.

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