Report: More than 1 million Pennsylvanians can’t afford auto insurance mandated by the state

Jan. 24--A new government report concludes that some 18 million Americans cannot afford auto insurance coverage mandated by states, including 1.1 million people in Pennsylvania.

The first annual analysis, by the U.S. Treasury Department's Federal Insurance Office, looked at more than 32,000 ZIP codes nationwide, flagging those where at least half the population was made up of minorities or low-to-moderate income households.

It then compared auto premiums with household incomes in those areas, finding that car insurance was generally unaffordable in 845 of the roughly 9,000 flagged ZIP codes.

In Pennsylvania, 35 of the state's 354 flagged ZIP codes were considered to have unaffordable premiums, including four in Allegheny County.

Except for New Hampshire, all states require consumers to maintain auto insurance as a condition for registering and driving a car.

The report was applauded by the Consumer Federation of America, which called on state insurance regulators to step in.

State governments should not force people to buy insurance -- punishing those who don't carry it with fines, registration suspension and even jail time -- but then pay no attention to whether the prices are affordable, said J. Robert Hunter, director of insurance for the consumer group, based in Washington, D.C..

For most Americans, getting a good job requires an automobile, the federation noted.

"For low- and moderate-income drivers in particular, affordable auto insurance plays a critical role in improving their economic situation," the group said.

Pennsylvania was one of six states with the greatest number of people living in ZIP codes where state-required auto insurance was found to be unaffordable. The others were New York, Florida, New Jersey, Michigan and Texas.

The average U.S. household spends about 2 percent of annual income on personal automobile insurance, according to the Treasury Department's report.

The study calculated an affordability index for each of the flagged ZIP codes, labeling those with an index above 2 percent as unaffordable.

In many of the ZIP codes, there was not enough data available to calculate an index.

Most of the 35 ZIP codes deemed unaffordable in Pennsylvania were concentrated in Philadelphia, where the highest index was 6.2 percent.

In Allegheny County, the unaffordable ZIP codes were 15104 (affordability index of 2.09 percent); 15110 (2.78 percent); 15213 (2.29 percent) and 15219 (2.79 percent). The areas generally covered by those ZIP codes included parts of Uptown, the Hill District, Oakland, Duquesne, Rankin and Braddock.

When asked to comment, the Pennsylvania Insurance Department said it had not completed a full review of the report.

"Insurance rates must be based on insurance losses and expenses," the agency noted in an email, adding that consumers should shop around for the most competitive rate

Patricia Sabatini: [email protected]; 412-263-3066.

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