Canadian Underwriter

Black drivers in the U.S. pay way more for auto insurance

April 5, 2016   by Staff

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Getting stopped by cops, getting shot by cops, being ignored for job applications and barred from buying real estate in upscale neighbourhoods… Now add to those burdens the news that African Americans are being gouged over their car insurance.

In predominantly black U.S. communities, premiums cost 70 percent more on average than they do in predominantly white districts. That discrepancy skyrockets to 194 percent in upper middle-income areas. So while a driver in a posh white zip code pays $717 a year to insure her Honda Civic, a policyholder in an equally affluent black community driving the same car would have to pay $2,113 for the same coverage. These price differences are found across the country, and in policies from the five largest insurers in the U.S.: Progressive, Farmer’s, State Farm, All State and Geico.

“We are calling on insurers to prioritize the use of factors over which drivers have some control, such as miles driven, years behind the wheel [and] accidents caused,” Tom Feltner told Top Broker. Feltner is the director of financial services at the Consumer Federation of America, which undertook the research.

It’s unfair to base premiums on education level, home ownership status and other factors policyholders can’t easily control. “We certainly can’t expect consumers who want to reduce their auto insurance by 20 percent to go out and buy a home or go back to college. It’s much more important that we encourage consumers to drive safely and that’s how we want insurance to be priced.”

And crippling premiums can cause some drivers to skip insurance all together. “We see a very strong correlation between uninsured rates and poverty rates,” Feltner says. “That suggests to us that one of the primary drivers for uninsured motorist rates is the fact that insurance is simply not accessible and not affordable.”
Copyright © 2016 Transcontinental Media G.P. This article first appeared in the March 2016 edition of Canadian Insurance Top Broker magazine

This story was originally published by Canadian Insurance Top Broker.