Auto insurance is not affordable for 19 million Americans who live in New York, New Jersey, Michigan, Pennsylvania, Texas, Connecticut, according to a study conducted by the U.S. Treasury Department‘s Federal Insurance Office (FIO) and published by Reuters.
The survey has found that car insurance is unaffordable in 845 areas across United States, as defined by postal codes. Those areas are home to minorities and Americans with low-to-moderate incomes.
States with the greatest number of residents facing unaffordable insurance include New York (5.2 million), Florida (2.8 million), New Jersey (2.3 million), Michigan (1.7 million), Pennsylvania (1.1 million) and Texas (873,000).
Reuters reporter Suzanne Barlyn, explains that Congress “established the FIO in 2010 as part of the Dodd-Frank financial reform law, tasking the office with monitoring whether underserved communities have access to affordable non-health insurance products such as life and property insurance”.
All U.S. states require drivers to buy some type of auto insurance. The FIO’s study is the department’s first research to measure auto insurance affordability. It showed that many Americans who cannot afford coverage are at a disadvantage, because drivers tend to have more economic opportunities including employment.
FIO defines insurance as “unaffordable” if it costs more than 2% of the median household income within a zip code. The FIO’s research paper analyzes population and insurance premium data to create an index that consumers and policymakers can use to check affordability over time.