Study suggests that auto insurance may be too expensive for low income drivers.

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Auto InsuranceA new study from the Consumer Federation of America (CFA), a consumer advocacy group, suggests that auto insurance is too expensive for the poorest Americans to afford. CFA claims that this is to bias seen in the insurance industry despite the fact that insurers cannot base prices solely on a person’s income. In most states, however, insurers can use socio-economic information to price policies, which directly correlates to income. This could be a major problem in states in which auto insurance is mandatory for all drivers.

The study shows that, in some states, drivers are required to pay at least $1,000 a year for auto insurance. Most of these policies are basic liability coverage, which is of little use to low income drivers. The study also argues that the number of miles driven by an individual is adding to the imbalances in the insurance industry. The CFA believe that something must be done to provide low income drivers with protection against the insurance industry and the group is now pressuring lawmakers to take action.

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The insurance industry is decrying the study, claiming that it does not account for several factors that contribute to the overall price of insurance coverage. One problem insurers are having with the study is that it targets only them. Insurers suggest that automakers are also at fault for manufacturing expensive vehicles that, at time, are not entirely safe to drive.

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One Thought to “Study suggests that auto insurance may be too expensive for low income drivers.”

  1. elle

    Why doesn’t the conversation include the insurance rating of individuals which is based on their credit. Our current economy has hit many individuals very hard with losing jobs, housing and credit rating and it seems that all industries that using these ratings are benefiting by gouging struggling Americans with higher rates on insurance, loans etc. Why isn’t this disclosed? Also if we can give monies and loan forgiveness to large corporations, why are we not doint the same for individuals?

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