poverty

Poverty is Expensive, Car Insurance Edition

How much more? On average, 59% more, but it can vary wildly. GEICO apparently charged one Minneapolis woman 300% more than a similar woman of “higher socioeconomic status.”

Insurance companies say the disparity is actually due to risk factors like education level and homeownership, not income. Those with less money tend to have less education and lower rates of homeownership, which apparently makes them more likely to get into an accident. But it amounts to the same thing: the less money you have, the more you probably pay for car insurance.

[Star Tribune via MinnPost]

Poverty and Planning for the Future

That’s from an article in the New Republic citing this study (and others) on the influence of poverty on planning for the future. It reminds me another article, this one from the Washington Post, about structured settlement purchasing. People will sell years of payments from a lawsuit settlement for an up-front lump payment. It’s nearly always a rip-off, but there is a kind of logic to it. What good is $1,000/month five years from now when you can’t even drive yourself to work right now?

I helped a client once who lost his license because he was pulled over and didn’t have insurance, which he couldn’t afford. He was still driving because he fixed cars for a living, and he needed to be able to transport parts. So he kept getting tickets, and he is probably in jail by now just for trying to earn a living. Why couldn’t he just wait until he could get another license? Because he needed to work to pay his rent, and anyway he still wouldn’t be able to afford insurance. Why didn’t he take the bus? Try transporting an engine block on a bus. What else could he do?

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