Higher Insurance Rates for Middle-Class Motorists

There are a lot of different expenses associated with owning an automobile. Apart from maintenance and the ever-growing cost of gas, people also need to pay for car insurance. A recent study by the Consumer Federation of America (CFA) suggests that good drivers in moderate-income areas are often quoted high rates by many major coverage providers.
To get these results, the CFA compared quotes from four leading insurers across 15 major cities for moderate-income drivers who were searching for the minimum amount of liability protection required in their state. The CFA was surprised to find that 56 percent of the estimates they received were over $1,000 and that 32 percent exceeded $1,500. The question that continues to stump the CFA is why low- and moderate-income drivers with perfectly clean driving records are being charged so much for basic liability protection.

The Consequences of Higher Premiums

The CFA has called on state insurance commissioners to investigate these seemingly discriminating price differences, saying that the inflated prices in low-to-moderate income areas has led to a higher concentration of uninsured motorists.
Many people in these areas say that they are unable to purchase car insurance online or through an agent because they cannot afford the coverage. However, instead of making policies more affordable, many states have heightened the penalty for not meeting state financial responsibility requirements. California is one of the few states that offer a low-cost program for low-to-moderate income vehicle owners with clean driving records. A large number of people on the road without adequate protection can have a number of consequences.
If someone is struck by another motorist, the responsible driver’s insurance ends up paying for the damages. If someone is hit by someone who has no coverage, however, the victim’s own insurer often ends up paying for any hospital-related medical bills as long as the policyholder has purchased uninsured motorist (UM) protection. Consequently, an insurance company is going to charge more for UM or collision coverage for drivers living in areas with fewer insured vehicle owners.
Although the CFA uncovered a high number of overly expensive policies, prices also varied significantly between insurers. While some quotes were over $3,000, others were priced under $500. The reason for these differences is every coverage provider interprets risk differently. If low- and moderate-income drivers shop around and explore as many quotes as possible, they may be able to find adequately priced car insurance.