Federal Insurance Office Reports Florida Among Top States in Which 18 Million+ Americans Live in ZIP Codes Where Auto Insurance is Unaffordable

Jan 25, 2017

On January 23, 2017, the Federal Insurance Office issued a report detailing the severe problems low- and moderate-income (“LMI”) Americans face in affording the auto insurance coverage required to be purchased by all states except New Hampshire.  Part of the U.S. Treasury Department, the Federal Insurance Office (“FIO”) found that car insurance is generally unaffordable in 845 traditionally underserved ZIP codes across the United States. 

States with the greatest number of people living in ZIP Codes where the state-required auto insurance has been found to be unaffordable are 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 thousand).

To read the report, click here.  To view the accompanying study data, click here.

The FIO report, entitled “Study on the Affordability of Personal Automobile Insurance,” assessed the cost of basic liability auto insurance in relation to household incomes in the nation’s LMI ZIP codes and communities of color.  It identified as unaffordable the ZIP codes in which basic auto insurance premiums cost, on average, more than two percent of that ZIP code’s median household income.  Specifically:

  • 18.6 million people live in ZIP codes where auto insurance is unaffordable;
  • Auto insurance is unaffordable for more than half of the residents of underserved ZIP codes in five states – Michigan, New Jersey, Rhode Island, New York, and Delaware;
  • Among the largest states in each of the four census regions – New York, Florida, Illinois, and California – only California, which has the nation’s most vigorous insurance consumer protections, has fewer than 1 percent of its residents living where auto insurance exceeds the FIO’s affordability standard.

The study and the supporting data evaluated average premiums for more than 9,000 ZIP codes.

Consumer groups’ most recent letters to the FIO on the study are available here and here.

“In every state but New Hampshire, American drivers are required to buy auto insurance, but there had never been a comprehensive study as to whether or not insurance prices are even affordable for lower- and moderate-income Americans until now,” said J. Robert Hunter, Director of Insurance for Consumer Federation of America (CFA) and a former Insurance Commissioner of Texas and Federal Insurance Administrator.  “The government can’t force people to buy products in the private marketplace but pay no attention to whether the prices are sufficiently affordable that people can comply with these laws. That’s why this report is so important and needs to be updated annually.”

In a press release issued this week, the CFA urged President Trump to increase job availability by ensuring that lower-income, good drivers living in the inner cities can afford auto insurance. 

“Academic research has repeatedly shown that limited mobility is directly correlated with limited economic mobility.   For most Americans, whether they live in inner-cities, suburbs, or rural America, getting to good jobs requires an automobile.  For LMI drivers in particular, affordable auto insurance plays a critical role in improving their economic situation,” the CFA explained.

In addition to this week’s report, the FIO issued a Consumer Report last month to assist state regulators in identifying problems in insurance markets that should help focus state regulators on ways to increase consumer protections.

To view the FIO’s Consumer Report, click here.



Should you have any questions or comments, please contact Colodny Fass.



Click here to follow Colodny Fass on Twitter (@ColodnyFassLaw)




To unsubscribe from this newsletter, please send an e-mail to colodnyfassnews@gmail.com.