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Drivers with Low-income Pay Higher Auto Insurance Premium

We all know our driving history, type of car you drive and even the place you live can significantly affect the auto insurance premium.  But how about your income?  It a recent study, a shocking reality has been uncovered on how the auto insurance underwriting practice penalizes drivers with low-income.

Researchers at the advocacy group found that the five largest auto insurers — Allstate, Farmers, GEICO, Progressive and State Farm — do not offer basic policies to safe drivers for less than $500 a year in more than one-third of the nation’s low-income areas.

The study was conducted based on 81,000 premium quotes issued in 50 large urban areas which is fairly large sample data.

For instance, a Baltimore resident Sharnette Streat, 45 years old, pays $1,764 a year for her 2004 Ford Escape with a clean driving record for the last 10 years.

The president of Insurance Information Institute, Robert Hartwig explains that the premium for insurance policies are calculated based on risks regarding the driver and the area the driver lives in.  He added that the cost of auto insurance for Americans with the lowest income fell 14 percent between 2008 and 2012.

It does help to shop around as the premium can vary significantly from one insurer to another.  But there it no guarantee that the drivers faced in unreasonably high premium would find an affordable plan.

Is it time for our regulator to look into this and find out why certain group of low-income drivers with such a clean driving records are quoted such high premiums?  Could it be the credit score of the drivers as we reported previously on how the credit score play a big part in calculating the insurance premium?

Drivers with Low-income Pay Higher Auto Insurance Premium Reviewed by Brandon on 9:56 AM Rating: 5

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