The poverty penaltySome of those non-driving factors can have a huge effect on rates.
Where you live, for example, can change the rates you are quoted by thousands of dollars, even for the same driver in the same car. (See “ The most and least expensive cities for car insurance.”) Insurance companies use their claims experience in a particular ZIP code to forecast how likely you are to file a claim.Credit scores are similarly predictive, insurers say. Research has shown that people with bad credit tend to file more claims -- and they wind up paying more both for credit and for car insurance. (See “ The double whammy of bad credit.”) The upshot is that many drivers without accidents or tickets pay car insurance rates that unfairly target poorer people, the CFA says. To illustrate its point, the CFA asked five major insurers for rates in moderate-income ZIP codes in five cities, using a 35-year-old with a clean driving record and good credit as its sample. Then it asked for rates that considered the non-driving factors. In Baltimore, for example, the driver would pay $2,696 a year to Progressive for Maryland's legal minimum liability coverage. But that number shrinks to $2,574 a year is the driver owns a home. It falls to $2,212 if she is married -- and to $1,450 a year if she moves to a higher-income ZIP code. “Low- and moderate-income families who are disadvantaged by insurer pricing policies need affordable liability coverage so they can drive legally,” says Brobeck. “The fact that these families often can't obtain this coverage helps explain why so many risk fines, or even imprisonment, by driving without insurance.”