Personal auto insurance is becoming more affordable for all income groups. According to a new report conducted by the Insurance Research Council (IRC), auto insurance has become more affordable for the nation as a whole and on a state level. The study, Trends in Auto Insurance Affordability, also revealed that other critical industries are not showing that degree of auto insurance affordability improvement.

Auto insurance affordability was analyzed by calculating an auto insurance expenditure-to-income ratio. The findings examine trends in affordability, thus reducing the intrinsic subjectivity connected to affordability analysis.

Insurance expenditure data from the National Association of Insurance Commissioners (NAIC) and the Bureau of Labor Statistics Consumer Expenditure Survey was used to calculate the auto insurance expenditure-to-income ratio. Results from both methods showed dramatic improvements in national auto insurance affordability over the long-term for average and low-to-moderate income (LMI) consumers. Presently, approximately 1.5% to 1.6% of income is spent on auto insurance in the U.S. (depending on the data set used) by the average consumer—figures much lower than in previous decades. Similar trends have been seen by LMI consumers.

The study also showed an improvement in auto insurance affordability in most states. Between the 1990s and 2000s, only five states did not experience improved affordability and only four between the 2000s and the present. Results across states with the lowest affordability, according to the report, are as follows: Louisiana (2.85% of income), Florida (2.45%), New York (2.42%), Delaware (2.18%) and Michigan (2.10%). The most affordable states were found to be North Dakota (1.03% of income), Iowa (1.05%), New Hampshire (1.06%), Virginia (1.07%) and Wyoming (1.08%).

Elizabeth Sprinkel, senior vice president of the IRC said, “There is a lot of interest in the affordability of auto insurance on the part of consumers, policymakers and regulators. This report adds to the discussion, showing that auto insurance is becoming more and more affordable.”

Source: Insurance Research Council

Special Reports /

Auto insurance affordability improves across all income groups

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