When you get that quote for auto insurance, you expect it to be based on your driving experience. You might also not be surprised that your age, gender, marital status, and credit score could influence how much you have to pay. But those may only be some of the non-driving related factors that determine how much you pay for insurance coverage according to some recent studies.
In a study conducted by an online insurance quote website, the data on quotes found people living in some states were paying much higher premiums than those living in other states. People living in Michigan, for example, were paying 8% on their family budget for car insurance premiums. That was a much higher percentage than in any other state. Premiums were also high in Louisiana where premiums accounted for 5% of spending. Other costly states include Kentucky, West Virginia, and Mississippi.
On the other hand, people living in Massachusetts, North Carolina, Hawaii, Alaska, Oregon, and Iowa are paying less than 2% of their family's budget towards premiums.
Part of the difference can be explained by the mandatory coverage required by each state. In Michigan, for instance, the state is one of only a handful that require personal injury protection coverage and it is the only state in which that coverage includes unlimited medical and rehabilitation benefits. In Hawaii and Alaska, car accidents are not as likely to occur as other states where more people are on the road and where populations are denser.
Where you live may not be the only factor costing you more, however. A recent study of insurance quotes from the four largest auto insurers in fifteen cities conducted by the Consumer Federation of America found people who earn the least end up paying more for the exact same insurance policy as someone likely to have a higher income. The organization requested quotes for the same policy for the same vehicle but changed only education level, occupation, and home ownership factors. The driver without a college degree, who worked a blue collar job, and who did not own a home ended up being quoted an annual premium of $3,457 compared to $1,759 for the college graduate with a white collar job and a mortgage.
The Sun Sentinel in Fort Lauderdale, Florida tested the study locally with similar results. While the difference paid between a secretary and an executive was only 2% in their study, the difference between someone without a high school diploma and someone who earned a doctorate was 114% with the former paying $489 more every six months for their auto insurance.
According to major insurance companies and trade groups, the reason for the difference goes back to one issue: accident risk. People with lower incomes are at greater risk of being involved in a car accident so their premiums are going to be higher. The increased premiums, they argue, aren’t a result of discrimination or deliberate attempts to charge lower income people more money but are a consequence of the statistics.
Whatever the reason, you should be aware that more than your driving record is impacting how much you pay for auto insurance.
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