Investigation finds drivers in minority areas pay more for car insurance

Consumer Reports, ProPublica examine zip codes, premiums

SAN ANTONIO – Car insurance premiums should be color blind, but a new investigation by Consumer Reports and ProPublica revealed that drivers in some minority areas are paying significantly more than can be explained by risk.  

"We 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," said Julia Angwin, ProPublica senior reporter.

The investigation found 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," Angwin said.

In California, Pernell Cox is 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 predominantly white neighborhood of comparable risk.

The California Department of Insurance criticized Consumer Reports’ and ProPublica’s approach. Liberty Mutual, the parent company of Safeco, said it is “committed to competitively priced car insurance options.”

The Illinois Department of Insurance called the methodology “incomplete” and said it does not tolerate discrimination. Geico did not comment.

Meanwhile, Otis Nash said he hopes rates become fairer, but for now, Geico is among the cheaper insurance companies he could find in Chicago.

Cox shopped around in Los Angeles and found $400 in annual savings with a different insurer.

Car insurance rates can vary widely state by state, even neighborhood by neighborhood. Consumer Reports said comparison shopping can save you a lot of money.


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