Lower Income = Higher Insurance

Would You Be Surprised to Learn That Consumers with Low Incomes May Pay More for Auto Insurance?

Most drivers realize that insurance rates vary depending on where they live and work and how safely they drive. But did you know that having a lower income could actually cost you more money for auto insurance, according to a recent report by the Consumer Federation of America (CFA)? Their study shows that the measures insurance companies use to price their policies are pricing many lower-income consumers out of the market.

In many states, low-income consumers, who usually only buy their state’s minimum required liability coverage, are often charged more than if they bought liability coverage with higher limits.

Unfortunately, a market that charges some consumers too much for insurance guarantees that some will choose to drive without insurance, as driving is so necessary to financial well-being in today’s society. The authors of the study suggest that “pricing should be largely influenced by factors that drivers can control, like the cars they drive and how far and safely they drive them.” Further information is available at the original New York Times article.

Readers: What do you think? 

Should low-income consumers who have poor credit scores, but no accidents or moving violations in the last five years, be charged more for auto insurance than those with excellent credit scores and the same driving record?

If yes, why? Or, if no, why not?