The Honda Civic may cost more, unfairly so, to insure if you live in the inner city, according to the CFA.

This story has been updated to include a response to the CFA study by an insurance industry trade group.

Millions of low- and moderate-income American motorists, especially those with lower education levels and living in inner cities, are being unfairly penalized with high insurance rates, even if they have steady jobs and clean driving records, contends the Consumer Federation of America.

In a survey of 15 cities and surrounding suburbs, these motorists routinely were required to pay at least $900 for collision and comprehensive coverage, with 50% being hit with bills of more $1,500, according to a new CFA study that checked rates for a 30-year-old female bank teller with 10 years driving experience and no collisions or tickets on her record, owning a 2004 Honda Civic.

“The price can easily double or triple” for a person of moderate means and lower education, said J. Robert Hunter, the consumer group’s Director of Insurance and a former Texas Insurance Commissioner.

And insurance premium penalties compound when an otherwise seemingly low-risk driver doesn’t own a home or has a less than stellar credit record, CFA officials stressed. In many cases, such motorists wind up paying more for basic levels of coverage than they do for fuel or even for the cost of a car loan. That can make it difficult for some to purchase a vehicle.

“High auto insurance premiums represent a huge barrier to car ownership, and economic opportunity, for millions of lower-income Americans,” said Stephen Brobeck, CFA’s Executive Director.

The non-profit organization noted that not all insurance companies follow what was described as “discriminatory” practices. USAA, which is geared to military personnel, does not use such measures when determining premiums. And State Farm tends to downplay such factors when calculating rates.

But low-income and poorly educated motorists tend to be hit by high penalties from some other major insurers, notably GEICO and Progressive, according to the CFA study.

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Motorists “clearly need relief,” said CFA Executive Director Brobeck. He pointed to California as an example of how insurance rules should be revised. The state does not permit factors such as education or income to be considered when setting rates.

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Asked why rates run so high, Hunter suggested many insurance companies don’t want to carry lower-income, inner-city customers. They prefer to handle higher-income suburbanites who may have multiple, high-price vehicles to insure.

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Ironically, discriminatory insurance practices impact even those affluent suburbanites, CFA officials noted. All too often, motorists on a tight budget will drive without insurance, or may lapse in paying premiums. That can create serious problems if they are in a crash. And in most states, even well-off drivers wind up paying additional fees to compensate for uninsured drivers.

What is a fair price for insurance? The CFA asked ORC International to ask a representative sample of Americans what they thought that 30-year old woman driver should be paying. Four-fifths of the respondents said annual coverage should be less than $750, and half thought the fair amount would be no more than $500.

The CFA study is generating some controversy. The Property Casualty Insurers Association of America agreed that “consumers should shop around for the right coverage,” but the insurance trade organization also argued that the CFA’s proposals “could  cause unfair subsidies and break the critical link between risk and pricing.” The result, it concluded, would be an “overall” increase in insurance premiums.