Are Auto Insurer’s Encouraging Lower Income People to Drive With No Insurance?

Columbus, OH car accident lawyers know that car insurance companies take many different factors into account when they determine what a person’s premiums should be for car insurance. A lot of the things that car insurers consider make sense, such as your accident record or whether your car has good safety features.

Recently, however, a new study conducted by the Consumer Federation of America suggested that auto insurers are considering some factors that seem to have very little to do with whether someone is a good driver: income and education.121040939

Unfortunately, the Consumer Federation of America (CFA) has expressed concern that this fee-setting practice of car insurers may be putting lower income individuals into a situation where they are all-but priced out of the insurance market and left to make the tough choice of buying inadequate insurance they cannot afford or taking the risk of breaking the law and driving without coverage.

Lower Income Individuals are Being Charged Higher Rates

To provide more essential information to those who buy car insurance, the Consumer Federation of America recently launched an investigation in order to determine whether car insurers were considering income and employment when setting prices.

Most Americans do not believe that these criteria should be taken into account. In fact, a recent survey of 1,010 adults showed that the vast majority thought it would be unfair to use either education or occupation when setting rates. In total, 68 percent of adults surveyed objected to the use of education and 65 percent thought it would be unfair to consider occupation.

Despite the fact that the majority disagrees with the practice, the evidence showed that car insurers were, in fact, considering both income and career. Sadly, the insurers were charging people with limited education and “blue collar” careers more, and in some cases much more, than better-educated people in professional occupations or government jobs.

The CFA conducted its research by securing quotes from top auto insurance companies, keeping all information the same but just changing the variables as far as employment status, education and income.  The results showed that all of the insurance companies were charging the lower income applicants higher premiums.

Geico, for example, charged drivers who had only high school degrees and who were factory workers as much as 45 percent more than college-educated plant managers.  Progressive charged the factory worker a premium of about 33 percent in some locations, and the factory worker who got insurance through Liberty Mutual or Farmers could expect to pay between five and 13 percent more for insurance than a government worker or someone in a “professional job.”

Charging higher premiums to those who can least afford it is not just a practice that most Americans disagree with, but it is also a dangerous practice. As the CFA notes, the unaffordable insurance could cause some lower income people to be forced to drive without it. This would endanger every motorist, since those who became involved in an accident with an uninsured low-income driver would have virtually no recourse to obtain compensation for his car accident losses caused by the uninsured driver.

If you or a loved one was hurt in a car accident in Ohio, call the Smith Law office today at 800-930-SCOTT to schedule a free consultation.


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