In almost every state, including Georgia, lawmakers have made car insurance mandatory. Those caught without insurance risk losing their driver’s license and may have issues keeping their job. According to a report from the Consumer Federation of America, a low-income driver has a difficult time receiving affordable insurance, even with a clean driving record.
Auto Insurance Not so Cheap
The report revealed that five of the nation’s largest auto insurance companies (Allstate, Farmers, Progressive, Geico and State Farm) did not offer minimum coverage for less than $500 for most of the country. This explains why many low-income Americans choose to drive without insurance. According to a report from the CFA, the majority of Americans, 76 percent, believe that it is fair to pay less than $500 per year for minimum liability insurance.
Moreover, high annual premiums can stunt opportunities for education and career growth when a person needs car insurance to go to work or school.
Switch Insurance Providers
J.D. Power findings show that people saved an average of $300 after switching policies. The longer a customer has been with an insurance company, the larger their savings because the rates increased over time.
What Tom Feltner Says
Tom Feltner, CFA’s director of financial services, said that higher insurance premiums stop Americans from maximizing economic opportunities. Feltner and his team analyzed more than 81,000 insurances quotes from across the nation. They compared minimum coverage in neighborhoods that earned an average of $41,638 to low-income drivers who earned $21,000 or less per year and found that low-income areas pay more.
This research raises the question of whether auto insurance is priced fairly for low-income drivers. CFA urges federal and state regulators to investigate this issue to make car insurance affordable to low-income drivers who have a clean driving record. Additionally, these premiums do not seem to be getting cheaper, which adds to the problem for low-income Americans.