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Auto Insurance: A National Issue of Economic Justice
Douglas Heller
Insurance Expert
Consumer Federation of America
January 2019
In 2018, Americans spent about $240 billion – almost a quarter trillion dollars – on auto
insurance.
1
As a product that government requires drivers to purchase, auto insurance deserves
special attention and oversight to ensure that premiums are fair and affordable. This is especially
the case because access to a vehicle proves critical to economic stability and mobility.
2
Although auto insurance is a major monthly expense and difficult burden for tens of
millions of Americans – and a product that consumer and civil rights groups have long sought to
reform – it does not receive sufficient attention as an economic justice concern. In fact,
mandatory auto insurance is unaffordable to millions of low- and moderate-income drivers and
particularly so for people of color.
3
The significant challenges created by high cost and, often,
unfairly priced auto insurance makes addressing the issue a matter of economic and social
justice.
Around the country, state laws strictly enforce the purchase of auto insurance through
severe fines, impounded cars, and even jail time for driving uninsured, but lawmakers and
regulators devote much less energy to curbing unfair and excessive pricing by the insurance
companies selling this coverage. Nor are policymakers working hard enough to develop new
1
https://www.iii.org/fact-statistic/facts-statistics-auto-insurance
2
See, for example, Pendall, R., Hayes, C., George, A. T., McDade, Z., Dawkins, C., Jeon, J. S., ... & Smart, M.
(2014). Driving to opportunity: Understanding the links among transportation access, residential outcomes, and
economic opportunity for housing voucher recipients; Baum, C. L. (2009). The effects of vehicle ownership on
employment. Journal of Urban Economics, 66(3), 151-163; Lucas, M. T., & Nicholson, C. F. (2003). Subsidized
vehicle acquisition and earned income in the transition from welfare to work. Transportation, 30(4), 483-501; and
Taylor, B. D., & Ong, P. M. (1995). Spatial mismatch or automobile mismatch? An examination of race, residence
and commuting in US metropolitan areas. Urban studies, 32(9), 1453-1473.
3
According to the U.S. Department of Treasury’s Federal Insurance Office Study on the Affordability of Personal
Automobile Insurance (2017), more than 18 million Americans live in ZIP codes where auto insurance is
unaffordable.