State Farm Mutual Automobile Insurance Co. is changing the way it applies discounts to its policyholders' auto insurance premiums. The nation's largest auto insurer plans to set discounts for Medical Payments (MedPay) and Personal Injury Protection (PIP) based on the injury history of each vehicle. State Farm calls the new plan the "vehicle safety discount."

Previously, State Farm gave auto insurance discounts on MedPay or PIP coverage when a policyholder's vehicle contained one or more air bags. That plan offered policyholders a 20 percent savings on MedPay and PIP if the vehicle had one air bag, and 30 percent for two air bags.

State Farm will delve into its deep database of insurance claims information to find each vehicle's injury history — meaning the severity and frequency of injuries that drivers and passengers sustain in a specific vehicle during a car crash. "We have used the real-life laboratory in which millions of State Farm insured vehicles travel every day to determine the vehicle safety discount," says Gary Grant, a vice president and actuary at State Farm.

Dave Hurst, a spokesperson for State Farm, says about one-third of its policyholders will see a 14 percent decrease in their MedPay or PIP coverage, while one-third will experience a 14 percent increase. The other third will see no change in their MedPay or PIP premiums. Hurst says MedPay and PIP coverages account for approximately 10 percent of the total cost of auto insurance.

Is bigger better?

However, Hurst says the new plan is not an effort to reward people who drive larger vehicles, such as SUVs and pickups. "This is not a discount about big cars vs. little cars," he says. In fact, owners of several smaller vehicles — the BMW Z3, Ford Taurus station wagon, and Saturn SW — will receive the full 40 percent discount on MedPay or PIP.

The best and the rest

In addition to unveiling the new MedPay and PIP discount plan, State Farm has released its relative comprehensive and collision premium rankings for 2001 models. Thirty-six new vehicle models received State Farm's "best-rated" status because they qualify for the full 40 percent MedPay or PIP discount and are also rated lower-than-average for comprehensive and collision premiums.

State Farm charges 10 percent to 40 percent less than the standard rate for vehicles rated lower-than-average. The company charges 10 percent to 40 percent more than the standard rate for vehicles rated higher-than-average. Choose the vehicle manufacturer from the table below to view its State Farm rating.