Car Insurance and Race – New Study Shows Unfair Discrepancies

a young man in suit in his office showing an insurance policy and pointing with a pen where the policyholder must to sign | car insurance and race

If you are a minority or even if you simply live near or in a minority neighborhood, you may be paying higher premiums for your automobile insurance. A new investigation looking at car insurance and race from ProPublica found that drivers who lived around predominately African American and Hispanic neighborhoods did indeed pay more. For years, auto insurance companies have maintained that they needed to charge drivers in minority communities higher insurance premiums because there were more accidents in those specific neighborhoods. And since the algorithms used to calculate insurance rates are secret, few people questioned this practice. Until now.

The nonprofit investigative journalism organization ProPublica and Consumer Reports conducted a groundbreaking study to determine why minority neighborhoods were charged more for car insurance. The risk of accidents was the same for customers who lived in predominantly white parts of town as opposed to those who lived in the minority neighborhoods. So why was there a discrepancy?

The study itself controlled for variables by looking at what a single 30-year-old woman with a safe driving record would pay for liability coverage in various zip codes in 4 states. The differences in auto insurance prices between minority and white neighborhoods were significantly wider than the disproportion in risk. In some cases, premiums were 30% higher even in areas with similar accident costs.

The study even researched insurance payouts and differences in traffic, government oversight, and crime rates and still found that individuals who lived in black parts of the city paid significantly more than those who lived in white neighborhoods – even when they had the same likelihood of filing a claim.

Further Reading: Colorado Drivers Are 8th Worst Drivers in the Nation

The study also found that the disparities in insurance rates were not separated along economic lines but rather racial. They compared a wealthy part of Los Angeles that is predominantly African American to a lower to middle class Caucasian neighborhood and found that the results were the same. It didn’t matter if you were rich and black or poor and black – you still paid more for your car insurance than the average white driver.

These practices were reminiscent of “redlining” mortgage rates and denying loans to predominantly black communities – a form of financial segregation that is still being eradicated. The impact of disparity in insurance rates can be devastating and a significant obstacle to upward mobility.

Contact Our Fort Collins Car Accident Lawyers

Fort Collins Personal Injury Attorneys Timms FowlerIf you or someone you love has been injured in a car accident in Fort Collins, we can help you get back on track. Our Fort Collins car accident lawyers can negotiate with insurance companies to ensure that you are getting the maximum compensation for your accident and your injuries. Call the Fowler Law Firm today at (970) 232-3322 to find out how we can use our legal experience to help you recover maximum compensation.

 

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The Fowler Law Firm, LLC

Timms Fowler
Tel: 970.232.3322
The Fowler Law Firm, LLC
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Fort Collins, CO 80525
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