Car insurance premiums should be color-blind, but a new investigation by Consumer Reports
and ProPublica reveals drivers in some minority areas are paying significantly more than can be
explained by the risk. And what’s more troubling is the exclusive analysis finds the practice
could be happening across the country.
Otis Nash has lived in the mostly minority Chicago neighborhood of East Garfield Park for his
entire life. Otis is rated a good driver and pays almost $200 a month for his Geico auto
insurance policy. And Christopher Day, who is also rated a good driver and lives 14-miles away
in the mostly white Chicago neighborhood of Andersonville, pays around $115 a month for a
Geico policy with more coverage for liability but less for comprehensive and collision.
It’s a disparity Consumer Reports and ProPublica saw time and again. ProPublica looked at 34
different insurers in Illinois, and 33 of them had, on average, a difference between minority and
non-minority neighborhoods of higher than 10-percent.
And the price disparity based on ZIP codes is not just happening in Illinois. Three other states--
Missouri, Texas and California-- also provided data used in the investigation. Based on these
four states, is that it certainly raises questions about what’s going on nationally.
Take California -- Pernell Cox, a Safeco customer, who lives in the affluent, predominantly
African-American neighborhood of View Park in Los Angeles. The investigation found that a
safe driver in View Park pays 13 percent more on average than one who lives in a white
neighborhood of comparable risk.
The California Department of Insurance criticized Consumer Reports’ and ProPublica’s
approach. Liberty Mutual, the parent company of Safeco, says it is “committed to competitively
priced car insurance options.” The Illinois Department of Insurance called the methodology
“incomplete” and says it does not tolerate discrimination. Geico did not comment.
Meanwhile Otis Nash says he hopes rates become fairer, but for now Geico is among the
cheaper insurance companies he could find in Chicago. Pernell Cox shopped around in Los
Angeles and found a $400 annual savings with a different insurer.
Car insurance rates can vary widely state by state, even neighborhood by neighborhood.
Consumer Reports says if you haven’t competitively shopped your policy in recent years,
spending a few minutes doing so could save you a bundle.
NerdWallet recently did the math and found the top three cheapest options for NC drivers whether you have kids, a moving violation, bad credit, etc.