Organizations, activists and academics have long questioned pricing variations in many industries that negatively impact consumers of color. On July 23, , the National Association of Insurance Commissioners NAIC announced the formation of a special committee designed to examine current practices in the insurance industry that potentially disadvantage people of color. The committee is dedicated to making recommendations based on its findings by the end of the year.
Auto insurers follow state specific-rules and regulations to set ZIP-code-level premiums that are based on the frequency and severity of claims, where severity refers to the cost of paying a claim. The more expensive and more frequent the claims, the higher the premium prices.
However, this correlation may be surprising for many drivers given that advertising often claims to reward safe driving and emphasizes that rates are based on good behaviors and customer loyalty. However, in many cities across the United States, where a driver lives plays a large role in determining car insurance rates. Oakland, California, had one of the strongest negative correlations between white population percentage and annual car insurance rates among big cities In some cities like New Orleans, Louisiana, which has a Based on the analysis, ZIP codes with a smaller percentage of the population that is white tend to pay more for car insurance.
Among all of the locations MoneyGeek analyzed, 12 cities ranked in order of strongest negative correlation between white population percentages and car insurance rates stand out as having extreme price variations in annual car insurance premiums based on ZIP codes. They represent a cross section of America, spanning the West Coast, Midwest, Southwest, South and East Coast — illustrating that the problem is not isolated to one particular region of the country.
While cities like St. Louis, Missouri; Chicago, Illinois; and Atlanta, Georgia have high levels of ZIP-code-based segregation, that difference is not always the determining factor. A common factor between the 12 cities is at least a 34 percentage point difference in white population between the more diverse ZIP codes that pay the most and the less diverse ZIP codes that pay the least.
In ZIP codes where premiums are more expensive, drivers are charged more not because of their personal driving history, but because of a higher frequency and severity of claims in the area. Three cities — New Orleans, Louisville, and Baltimore — have the highest auto premium disparities. In some cities, living in a more diverse ZIP code can weigh as negatively on your car insurance payment as having a 16—20 mile-per-hour speeding violation or a 55—60 point drop in your credit score.
This means that even with a spotless driving record, people living in ZIP codes with a higher Black and Latino population are often penalized despite their personal driving record. The following table shows the observed premium differences and compares that difference to the cost of having a speeding ticket and credit score difference.
MoneyGeek engaged academic thought leaders with expertise in structural inequality advocacy and economics to answer pressing questions about auto insurance. The opinions and solutions expressed are the views of the individual subject matter experts. Insurance and anti-discrimination laws vary widely from state to state. If you suspect that you live in a ZIP code with racially influenced car insurance rates, there are ways to speak up and find better rates.
Data is a vital tool to promote social and financial equality. Car insurance keeps society accountable and reduces risk, and as such, insurance payments based on individual risk and driving history can help keep drivers safe and covered in the event of an accident. As more communities and companies confront unequal structures that financially impact communities of color, leveraging comprehensive data can serve as a catalyst for change that promotes equality and safety for all drivers.
The following table summarizes the key data of all 69 cities where the data set included 10 or more ZIP codes. The analysis reviewed premiums holding all other factors equal. MoneyGeek also used data from Quadrant to analyze the increased premium costs associated with a credit score decrease or a speeding ticket for the same driver profile in these cities.
MoneyGeek utilized the most recent five-year population estimates, including demographic data by ZIP code from the U. Census Bureau census. Author Poonum Desai is a former economics professor now turned video journalist and author. In her free time, Poonum loves to work out, go to concerts when it is safe again to do so , and spending time with family. This article originally appeared on MoneyGeek.
There are many factors that influence your car insurance premium. But there are some that are. Here are some ways to lower your car insurance bill. Most auto insurance companies will quietly raise your rates over time, which is why shopping around for new car insurance quotes can yield great savings and be a great way to find the cheapest car insurance.
Many people have too much or too little insurance. This guide can shed some light on how much car insurance you really need. The first two digits identify the state, for example post codes beginning with 0 or 1 correspond to Mexico City. All other post codes are assigned in alphabetical order. It is common in Mexico City to not only provide the street name and number if it exists , but also to state between which perpendicular streets the address is located.
This applies to taxis, store delivery services, and often needs to be put on official documents. The service can be unreliable and slow and to ensure that a package or important mail arrives in a timely manner, it may be worth using its MexPost service , although this may be more expensive.
Post offices are generally open Monday to Friday from to mid-afternoon and on Saturday mornings. Oath Keepers charged in Jan.
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