Why would people who make less money have to pay more for car insurance? Income should not play a role in auto insurance rates. Unfortunately, a report by the Consumer Federation of America (CFA) suggests it may be true.
While investigating car insurance rate increases after no-fault accidents, the CFA found that people with no accidents on their records and people with accidents saw similar rate increases. Regardless of their driving record, drivers with a lower income tended to have higher premiums than drivers with a higher income.
The report compared quotes from five car insurance companies for two drivers with identical information except for their education and income levels. The results show that people with higher incomes paid less after they were in a no-fault accident than people with a moderate income. On average, the increases were $78 and $208, respectively.
Additional reasons some companies charge higher insurance rates
For three years, the CFA has researched the car insurance industry and its treatment of lower-income drivers. Some of its studies show that auto insurance companies base premiums on factors that include:
- Marital status
- Homeownership vs. renting
- Owning a vehicle vs. financing one
- Race
- Education level
- Income
For more information about the CFA’s findings, visit their site.
