Car Insurance Investigation

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’s 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, 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.

All Consumer Reports material Copyright 2017 Consumer Reports, Inc. All Rights Reserved. Consumer Reports is a not-for-profit organization which accepts no advertising. It has no commercial relationship with any advertiser or sponsor on this site. For more information visit consumer.org.

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