6 areas pay high auto insurance

Jan. 24--Auto owners in six areas in and near the central city parts of Toledo pay vehicle insurance rates that are less affordable than other areas of the city, a new study shows.

The U.S. Treasury Department's Federal Insurance Office released its first study on the Affordability of Personal Automobile Insurance to provide a perspective on traditionally underserved communities of low and moderate income.

Using ZIP codes, the study tried to identify those areas nationwide where auto insurance was "unaffordable" according to its formula. The study formula looked at an area's average annual insurance premiums; if that figure was above 2 percent of the average median household income for an area, the auto insurance was "unaffordable."

Applying that formula to northwest Ohio, the study found six ZIP codes in Toledo where the average annual car insurance premiums were above 2 percent of the median household income. No other ZIP codes in northwest Ohio or southeast Michigan fit into the "unaffordable" definition.

Those that did were: 43604 (where the average premium comprised 4.78 percent of median household income), 43607 (2.36 percent), 43608 (2.06 percent), 43609 (2.43 percent), 43610 (2.47 percent), and 43620 (2.91 percent).

The Federal Insurance Office said the study findings are to be given to policymakers.

With nearly all states requiring auto owners and drivers to have liability insurance, the federal office said unaffordable insurance leaves many Americans forced to either not drive or drive illegally.

The study looked at 32,452 ZIP codes nationwide and found 9,172 that were identified as having primarily underserved consumers, minorities, and people of low and moderate income. The cost of auto insurance exceeded the 2 percent level in 845 ZIP codes, affecting over 18.6 million residents.

Ohio has 1,197 ZIP codes total and 41 had average premiums that exceeded the 2 percent of income level.

Ben Brown, vice president of USI Insurance Services' Toledo office, said the varying regulations of each state make generalizing about premium costs difficult. "All you need to do is cross the border into Michigan and your rate would go up significantly," he said.

But Mr. Brown said it's understood by insurers "that in cities where there's more congestion, there's a higher probability of having an accident or a break-in," necessitating the need for high premiums.

And some insurers, he said, have taken to using credit scores as a predictor for probability of having an accident and filing an insurance claim.

"The lower the credit score, the higher your auto rates are going to be. But of course there are other determining factors, such as driving record, violations, and the kind of car you drive," he said.

Contact Jon Chavez at: [email protected] or 419-724-6128.

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auto insurance, Jon Chavez, U.S. Treasury Department, toledo, car insurance, central city

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