The Surprising Reason You May Be Charged More for Car Insurance

What's Hot

Funny Money: Financial Wit and Wisdom From 50 Top ComediansCredit & Debt

Shoppers Boycott Businesses Selling Trump-Branded ProductsBusiness

50 Best Gifts Under $25 for Everyone on Your ListFamily

What the Richest 1 Percent Earns in Every StateFamily

6 Stores That Allow Coupon StackingSave

Why Washing Your Turkey Can Make You IllFamily

10 Ways to Retire Earlier Than Friends on the Same SalaryGrow

7 Foods That Can Lengthen Your LifeFamily

7 Government Freebies You Can Get TodayFamily

10 Ways to Pull Together the Down Payment for a HomeCredit & Debt

Your driving record isn't as important as you think it is when determining how much you pay for auto insurance.

If you’re poor or moderate-income, you’re likely paying more for your car insurance than wealthy people.

That’s according to a new study from the Consumer Federation of America, which found that economic and socio-economic factors not directly related to driving safety — like level of education, occupation and marital status and homeownership — have a major influence on auto insurance premiums.

In general, Americans who are single, didn’t attend college, don’t own a home, and work at blue-collar jobs have less money, Robert Hunter, the CFA’s director of insurance, told reporters in a phone interview this week.

“The combined effect of insurers’ use of these factors can result in considerably higher prices for low- and moderate-income Americans, leaving many overburdened by unfairly high premiums and others unable to afford insurance at all,” the study says.

The Washington, D.C.-based CFA analyzed minimum liability car insurance premiums in 15 moderate-income cities across the United States for its study. It found that motorists in the “poorer” economic categories were paying roughly 59 percent more for car insurance than people in the “richer” economic categories.

Although the average difference in premiums amounts to about $681 a year, Hunter said there was one instance in which a poor individual was paying $5,000 more for coverage, according to Michigan Radio.

“The current situation for low-income drivers is intolerable,” Hunter said.

The Insurance Information Institute, which represents property and casualty insurance companies, said the report’s findings are misleading.

James Lynch, the chief actuary of the Institute, said factors like education level and homeownership status may be unrelated to driving, but they are commonly used because they are linked to risk.

“They are all very good predictors of whether or not a person is going to be in an accident,” Lynch said. “Are insurance companies supposed to ignore information that’s staring them in the face?”

Lynch also faulted the report’s small sample size of 280 drivers.

Check out “What a Speeding Ticket Does to Your Car Insurance Rates.”

Want to pay less for auto insurance? Check out our “10 Tips to Cut Car Insurance Costs.”

What do you think of the report findings? Share your comments below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Making Extra Money: Earning $50 an Hour as a Tour Guide

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,891 more deals!