Four Reasons Low-Income Families Seem To Pay More For Car Insurance

There is a common misconception that auto insurance service companies charge low-income motorists higher premiums than they do high-income motorists. This is a misconception because insurance companies don't set out deliberately to charge low-income families high premiums. It is just that some of the factors that characterize low-income families are the same things that make them risky and drive up their auto insurance rates. Here are some of these factors:

Insecure Parking Spots

As you know, an auto insurance company will compensate pay if your car is stolen, your car is vandalized, and your personal items are stolen from the car. Parking in a dangerous area increases all these risks and may raise your auto insurance premiums. Unfortunately, low-income earners are more likely to lack secure parking spots compared to high-income families. For example, a low-income family may be forced to park on a side street while families with money may have a secure garage with CCTV cameras.

Neighborhoods with High Crime Statistics

Although crime is everywhere, there is evidence that poor neighborhoods experience more of the crimes that may affect car insurance rates than well-to-do neighborhoods. High rates of vandalism, robbery, theft, and burglary, for example, increase the risk that your car will be broken into. The insurance company has no option but to charge you more for that increased risk.

Low Credit Ratings

There is a salient link between credit scores and auto insurance premiums. After all, a credit score is a good indicator of your financial stability. One school of thought has it that if you have a low credit score, it's possible that you also don't have money for proper car maintenance, so you may be driving with a few issues here and there. That means your car is more likely to be involved in a crash or incur serious damage in case of one; of course, the increased risk translates to increased premiums (in some states).

Poorly Maintained Road Networks

The roads you drive on every day may affect the degradation of your car. Driving over potholes on a daily basis, for example, damages your car's rims, steering system, tires, and suspension system, among other parts of the vehicle. The damage may be sudden or it may be gradual, but it all makes your car more susceptible to further damages or even auto accidents. If you are a low-income earner, then it's possible that your local government also doesn't have the funds to maintain your local roads properly, and your neighborhood roads are in a sorry state. It makes sense, therefore, that you may have to pay high insurance premiums to protect your car.

What this means is that you can be a low-income earner and still enjoy low auto insurance rates. You just need to know how to manage the above factors, plus other things that affect auto insurance rates, because the above are just a few examples.

Share