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Minority Neighborhoods Pay Higher Car Insurance Premiums Than White Areas With the Same Risk
The article is too long to include. But here's an excerpt
The article is too long to include. But here's an excerpt
OTIS NASH WORKS SIX DAYS A WEEK AT TWO JOBS, as a security guard and a pest control technician, but still struggles to make the $190.69 monthly Geico car insurance payment for his 2012 Honda Civic LX.
“I’m on the edge of homelessness,” said Nash, a 26-year-old Chicagoan who supports his wife and 7-year-old daughter. But “without a car, I can’t get to work, and then I can’t pay my rent.”
Across town, Ryan Hedges has a similar insurance policy with Geico. Both drivers receive a good driver discount from the company.
Chicago Area Disparities in Car Insurance Premiums
Some car insurers charge higher premiums in Chicago’s minority neighborhoods than in predominantly white neighborhoods with similar risk of accidents. See the map.
Yet Hedges, who is a 34-year-old advertising executive, pays only $54.67 a month to insure his 2015 Audi Q5 Quattro sports utility vehicle. Nash pays almost four times as much as Hedges even though his run-down neighborhood, East Garfield Park, with its vacant lots and high crime rate, is actually safer from an auto insurance perspective than Hedges’ fancier Lake View neighborhood near Wrigley Field.
On average, from 2012 through 2014, Illinois insurers paid out 20 percent less for bodily injury and property damage claims in Nash’s predominantly minority zip code than in Hedges’ largely white one, according to data collected by the state’s insurance commission. But Nash pays 51 percent more for that portion of his coverage than Hedges does.
For decades, auto insurers have been observed to charge higher average premiums to drivers living in predominantly minority urban neighborhoods than to drivers with similar safety records living in majority white neighborhoods. Insurers have long defended their pricing by saying that the risk of accidents is greater in those neighborhoods, even for motorists who have never had one.
But a first-of-its-kind analysis by ProPublica and Consumer Reports, which examined auto insurance premiums and payouts in California, Illinois, Texas and Missouri, has found that many of the disparities in auto insurance prices between minority and white neighborhoods are wider than differences in risk can explain. In some cases, insurers such as Allstate, Geico and Liberty Mutual were charging premiums that were on average 30 percent higher in zip codes where most residents are minorities than in whiter neighborhoods with similar accident costs.
Our findings document what consumer advocates have long suspected: Despite laws in almost every state banning discriminatory rate-setting, some minority neighborhoods pay higher auto insurance premiums than do white areas with similar payouts on claims. This disparity may amount to a subtler form of redlining, a term that traditionally refers to denial of services or products to minority areas. And, since minorities tend to lag behind whites in income, they may be hard-pressed to afford the higher payments.
Rachel Goodman, staff attorney in the American Civil Liberties Union’s racial justice program, said ProPublica’s findings were distressingly familiar. “These results fit within a pattern that we see all too often — racial disparities allegedly result from differences in risk, but that justification falls apart when we drill down into the data,” she said.
i drive an 01 and i carry zero insurance on it, just insurance when i hit someone else. whereas this dude needs to drive a 2012 and carry collision on it, even though he's on the edge of homelessness and supporting a kid?
im sorry im so off base with that comment. and no one brought up his race