New Harris County Study Finds Drivers in Low-Income Zip Codes More Likely to Pay Higher Car Insurance Premiums and Be Ticketed for Failure to Carry Insurance

New Harris County Study Finds Drivers in Low-Income Zip Codes More Likely to Pay Higher Car Insurance Premiums and Be Ticketed for Failure to Carry Insurance 

AUSTIN, Texas—A new study by Texas Appleseed finds that current pricing practices for car insurance coverage have a disproportionately negative impact on drivers from low-income communities and communities of color in Harris County. The practices effectively criminalize poverty, create barriers for low-income drivers, and undermine the public benefit goal of all Texans carrying basic liability car insurance coverage.

“Many Texans are struggling to make ends meet, and they may feel like they have no choice but to prioritize necessities like groceries and rent, even if it means letting their car insurance policy lapse,” said Ann Baddour, the Director of the Fair Financial Services Project at Texas Appleseed. “Because these rates are determined partly using factors unrelated to driving behavior, such as zip code and credit score, there’s only so much someone can do to lower their monthly premiums.”

​​The report, Targeting by Zip Code: An analysis of the connection between car insurance pricing and related criminal justice consequences in Harris County, highlights three primary findings.

• Finding 1: Zip codes with higher insurance premiums experience higher ticketing rates for driving without insurance. The average ticketing rate for failure to have car insurance was 2.2 tickets per 100 residents. Every $100 increase in the cost of car insurance is associated with 1.7 more tickets per 100 residents.
• Finding 2: Drivers in low-income communities and communities of color are more likely to pay higher car insurance premiums and experience higher ticketing rates for driving without insurance than drivers in more affluent zip codes. Among the 46 low-income zip codes in Harris County, 30% of the population lives in a zip code with a high ticketing rate for failure to maintain car insurance, and 48% live in a zip code with high insurance costs for good drivers. In comparison, for moderate- and high-income zip codes, just 3% live in a zip code with a high ticketing rate, and 5% live in a zip code with high insurance costs for good drivers.
• Finding 3: Lower-income communities and communities of color face higher rates of warrants due to tickets for failure to carry car insurance. Although residents of low- and very low-income zip codes comprised 31% of Harris County's total residents, they were issued 42% of all warrants related to tickets for driving without car insurance. 

Driving without car insurance in Texas is a misdemeanor offense, and unpaid tickets can lead to warrants and even jail time. Unfortunately, rising car insurance premiums are making it less feasible for Texans to maintain coverage. According to the Texas Department of Insurance, rates jumped by 23.8% in 2022 and 25.5% in 2023. 

Although state law prohibits discrimination and requires insurance pricing to be “fair, just, reasonable, and adequate,” Texas Appleseed’s study found that current pricing practices are failing to meet those standards.

“Since the government requires every driver to buy insurance, the state must do more to make auto insurance affordable and not just focus on punishing people who can’t afford the coverage,” said Douglas Heller, Director of Insurance for the Consumer Federation of America. “Expanding marketplace options, improving regulatory oversight, and ensuring fairness in pricing are in the best interest of everyone on the road.”

In support of a fair and just market, Texas Appleseed recommends the following:

1. Limit geography-based pricing to larger territories to avoid segmenting drivers into demographically homogenous units.
2. Protect safe drivers from premium hikes tied to their credit history and to lapses in insurance coverage.
3. Require that the Texas Department of Insurance proactively review insurance pricing models and algorithms, as well as big data and artificial intelligence driven models, before they are used to price insurance, to ensure they do not lead to discrimination in pricing and are just, fair, reasonable, and adequate.
4. Consider establishing a program that offers a low-cost, bare-bones policy that could provide an alternative to driving uninsured for low-income Texans.

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About Texas Appleseed

As one of the most trusted resources for data-driven policy analysis and solutions, Texas Appleseed advocates at the state and local level for fair, just, and equitable laws. Our work has shaped hundreds of laws and positively affected millions of Texans by breaking down barriers through transformative policy solutions. Visit www.TexasAppleseed.org for more information.