Motorcycle Insurance Articles
Why Low Income Households Pay More For Motorcycle Insurance
2012-03-23
Surprisingly, low income people pay more for motorcycle insurance. No, motorcycle insurance companies do not usually use income as a factor in determining their policies, but they do often use other characteristics that are associated with low income individuals. This can be frustrating for individuals and households that want to own a motorcycle - perhaps they even want to own a motorcycle to replace a car so that they can drive more economically. However, individuals who know why their rates are the way they are can be in a position to lower them.
First, low income individuals may pay more for motorcycle insurance because motorcycle insurance companies typically look at place of residence when determining insurance rates. Individuals who live in poorer neighborhoods pay higher rates. The reasoning behind this is that people who live in poorer neighborhoods are more likely to have their bikes stolen or defaced. Still, this disadvantages those households who have low incomes and who can only live in areas where there is a great deal of crime.
Second, motorcycle insurance companies often look at education and occupation when determining rates. Individuals who have more education and better jobs are seen as less risky than those who have little education and blue collar jobs. The reasoning behind this is that people with a great deal of education and better jobs are more careful because they want to preserve their incomes or simply have a greater knowledge of risks.
Third, motorcycle insurance companies now tend to look at credit scores when determining rates. This controversial practice has been adopted because companies assume that those with better credit scores are less risky individuals in general. The idea behind this is that those who take fewer risks with their finances are likely to take fewer risks with their driving.
There is much debate and outrage surrounding the practice that motorcycle and auto insurance companies uses, which disadvantages the poor even more than they are currently disadvantaged. Some argue that it is unfair, perhaps keeping the impoverished or low income households from bettering themselves because transportation is often needed in order to improve a person's station. Others, however, argue that the reasoning behind the insurance companies' decisions is valid, and that individuals must accept this and simply not own a motorcycle if the cost is too high.
Regardless, low income individuals who know how these rates are tabulated are in a better position to negotiate with insurance companies. They may point to their good driving records, the fact that they are going to school or have a family or the fact that they have no legal records as proof of responsibility and reliability.