Low-income homeowners pay more for insurance in most states
In Detroit’s lowest-earning neighborhood, home insurance is $1,919 more annually than in the city’s highest-earning district.
On average, homeowners in low-income areas pay $117 more for home insurance than residents in wealthier districts, a trend that is more pronounced in the largest cities in 34 states, according to ValuePenguin.com.
The “surcharge” low-income homeowners pay equates to about 1% of the median income average across the largest cities’ lowest-earning neighborhoods. This figure can reach as high as 11% in some states, the site reported.
Across 15 states’ largest cities, low-income residents pay at least $100 more annually than those in more expensive neighborhoods.
Detroit sees the biggest gap, with homeowners in lower-earning neighborhoods paying $1,919 more a year than those in more well-to-do locations. The trend is also more predominant in Columbus, Ohio; New Orleans; Phoenix; and Jackson, Miss.
Racial disparity found
In addition, low-income areas where Black residents make up at least half of the population face higher home insurance costs when compared to wealthier parts of the same city, ValuePenguin reported. These charges can be as much as $3,514 more annually. For low-income areas with predominately white residents, the cost for home insurance is a combined $2,057 more relative to high-income sections.
“The conditions that produce expensive home insurance rates for anyone, regardless of income level, may be exacerbated in low-income areas,” Andrew Hurst, insurance data analyst at ValuePenguin.com, said in a release. “Homeowners or renters who face higher-than-average insurance rates can find cheaper coverage by comparing plans across insurers. Alternatively, take steps to increase your security if high rates are a response to high rates of crime, especially burglary.”
In nine states’ largest cities, the lowest-earning residents pay less compared to wealthy residents. Among those, low-income residents of Billings, Mont., and Little Rock, Ark., pay the least for home insurance relative to wealthier neighborhoods.
A similar finding was uncovered in California regarding discounts for auto insurance, prompting the state to consider starting a group discount program for low-income residents.
Related: