socioeconomic status, including education level, occupation, homeownership status, insurance purchasing history, and marital status. More recently, insurance companies have started to use information from credit reports to determine insurance premiums, and in some states credit scores can have more of an impact on premiums than any other factor. These higher rates make it even harder for ALICE and poverty-level drivers to afford insurance and increase the likelihood that they will skip payments or opt out altogether (Ong & Stoll, 2007; Heller & Styczynski, 2016; Consumer Reports, 2015). Another cost-saving strategy is not registering a vehicle, which avoids the annual fee and possibly the repairs needed for it to pass inspection. Other common but often unanticipated expenses associated with driving are speeding, parking, and other traffic tickets. In many states, drivers who cannot pay the fine can have their license suspended. In some cases, they can even receive jail time or be sentenced to community service (University of Wisconsin-Milwaukee Employment & Training Institute, 2015; American Association of Motor Vehicle Administrators, 2013; Consumer Reports, 2015; PBS NewsHour, 2014).
Consequences Long-term penalties: Avoiding insurance, registration, or tickets may provide short-term savings, but these strategies have long-term consequences such as fines, towing, and storage fees, points on a driver’s license that increase the cost of car insurance, and even impounding of the vehicle or license suspension. In particular, the system of large fixed fines for certain offenses in most municipalities hits low-income drivers harder than those who are more affluent. Having a driver’s license suspended for failure to pay a traffic fine not only takes away someone’s ability to get to a job but also harms credit ratings, which in turn can make it harder for people to get and keep jobs and take care of their families. These added layers of indirect consequence significantly increase traffic
54
UNITED WAY ALICE REPORT – THE CONSEQUENCES OF INSUFFICIENT HOUSEHOLD INCOME