Poorer areas pay higher auto insurance

A new report by the Consumer Federation of America found where the majority of drivers earn less than $21,000..

Insurance News

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In another example of the ever – present income inequality in this country, a new report has found more than one – third of the country’s lowest – income ZIP codes pay more for auto insurance than those from wealthier areas.

Commissioned by the Consumer Federation of America the study found in places where the majority of drivers earn less than $21,000 a year can’t obtain state – mandated insurance for less than $500 a year.

The CFA referenced California’s state auto insurance program as an example for other states, mentioning their liability coverage for good drivers, even in poor areas, cost between $226 and $338 annually.

“Our research raises important questions as to whether state-mandated auto insurance is priced fairly and is affordable for many lower-income Americans,” said Tom Feltner, CFA’s director of financial services. Several insurance associations took issue with the report, saying the auto insurance marketplace is highly competitive and that personal auto insurance hasn’t increased in price as much as other consumer costs.

Interestingly the quotes analyzed by the Consumer Federation of America did not include costs such as collision and comprehensive insurance because they are not mandatory purchases. These costs are purchased by two fifths of low income drivers and with the add-ons could be hundreds of dollars higher than the CFA projections.

According to the Insurance Research Council, nearly 13 percent of motorists are uninsured, with the highest number of uninsured drivers residing in California, Florida, and Texas. The council has said that uninsured motorists and unemployment rates have tracked closely, with many uninsured drivers saying they can’t afford the premiums.

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