March 22, 2012

Finding Auto Insurance Coverage For Low Income Households

In the past several months, politicians in some states have introduced legislation to stem rising insurance costs for low income drivers. Low income households pay higher than average rates for their auto insurance coverage due to the actuarial statistics that insurance companies use to figure rates. Low income drivers are simply more likely to make claims than wealthier drivers. As poor drivers often drive in ZIP codes with high crime and accident rates, they tend to pay more for collision and comprehensive coverage than wealthy drivers. Poor drivers also drive less expensive vehicles, which may not have side airbags and other modern safety systems that lead to reduced liability insurance and PIP coverage rates. For many poor drivers, rising insurance costs are a major problem. However, there are several ways that these individuals can reduce their premiums significantly.

One of the quickest ways to reduce the cost of auto insurance coverage is to change coverage limits and deductibles. This is risky for some drivers, but some individuals buy too much coverage initially and can afford a slight decrease in limits or an increase in deductibles. Drivers with low incomes should consider their typical driving habits and choose appropriate coverage. For example, if a driver regularly carpools, he or she should buy personal injury protection coverage, which pays for medical bills in an accident for the driver and passengers in the insured vehicle. However, a driver might not need this coverage if he or she has medical insurance and typically drives alone. Reading through the different coverage options on a policy and making minor adjustments can drastically reduce the cost of auto insurance coverage.

Another way to get lower rates is to look for insurance quotes online. Many poor drivers don't realize that they overpay for their coverage. By checking insurance quotes online with an auto insurance comparison tool every few months, drivers will develop a better understanding of their insurance rates. They might also find policies with lower premiums and relatively high coverage.

All low income drivers should ask their insurance providers for information on discount programs, as most insurers offer discounts that can effectively decrease car insurance rates without lowering coverage. Some of these discounts might be more effective for low income drivers. For instance, most insurance companies reduce their insurance rates for vehicles with anti-theft systems. Poor drivers who live in ZIP codes with high rates of auto crime see better benefits from these programs. Asking about insurance discounts is a quick way to keep premiums low, and while discounts won't always bring a poor driver's rates into the lowest possible group, they are an effective way to avoid rising insurance costs.