From Premiums to Possession: Connecting Auto Insurance and Auto Ownership Outcomes in Los Angeles

This study explores the impacts of auto insurance premiums on differences in car ownership decisions and outcomes across communities in Los Angeles County. Although insurance premiums are a foundation component in obtaining a vehicle, they are also spatially related to systemic factors. We examined how community-level characteristics such as area's income levels, racial composition, and local risk indicators like crime and accident rates influence insurance premiums, and in turn, how these premiums affect individual car ownership. Our two-stage approach first estimated average insurance premiums using tract-level data and then assessed the impact of these premiums on individual auto ownership outcomes via the discrete choice models. Results show that insurance costs play a key role, both directly and indirectly, in linking neighborhood disadvantage to lower automobile ownership, suggesting that insurance pricing reforms could help improve all communities' transportation access. Further advice is needed to extend the scope of the insurance premium study to better prepare for the rise of electric vehicles and fully autonomous vehicles