New Jersey drivers are paying too much for auto insurance, and for all the wrong reasons. People of color and other low-income drivers are currently being overcharged significantly by auto insurers because NJ allows them to use education level, occupation, and credit scores when determining auto insurance rates.
Consumer Federation of America and Consumer Reports both looked at the impact these factors were having on drivers in NJ. Here’s what they found:
- Drivers with excellent credit and a perfect driving record pay $842 on average – Drivers with fair credit pay $1,384 on average – Drivers with poor credit pay $2,153—a 156% increase based just on their credit!
- Drivers pay dramatically different premiums based on their ZIP code. Majority Black ZIP codes pay 49.5% higher premiums compared to majority white ZIP codes, and majority Latino ZIP codes pay 49.9% higher premiums.
- Residents of low-income ZIP codes (low income defined as median income below $50,000) pay 51.5% higher premiums compared to wealthy ZIP codes (with a median income of $150,000 or more).
- In 2021 Consumer Reports found that several major auto insurers—GEICO, Liberty Mutual, and Progressive charge higher premiums to drivers without a college degree.
- Consumer Reports also found that insurers routinely charge drivers more based on their job. Drivers with higher-earning jobs get charged less while drivers with lower-paying jobs pay more.
The solution: pass S357/A1674. This legislation would prohibit insurers from using credit history, education, and occupation in auto insurance pricing and underwriting. This bill will help lower costs for consumers, reduce discrimination, and make auto insurance more fair and equitable.