Lawmakers and Advocates Urge NJ Assembly to Act Quickly and End Racial and Economic Bias in Setting Auto Insurance Rates
Bill would prevent insurers from using credit score, employment and education to set premiums
NEWARK, NJ – Members of the New Jersey Assembly, joined by auto insurance policyholders and state and state consumer and racial justice advocates, met today to call on the Assembly to adopt Fair Auto Insurance Rates Act A-1657, which would ban the automobile in New Jersey. insurance companies use the education, occupation or credit rating of residents to determine premium levels.
The bill was passed by the New Jersey Senate on January 28e and awaits a hearing in the Assembly’s Committee on Financial Institutions.
“Auto insurance premiums should be based on a person’s driving record and history, not on unfair and unsubstantiated assumptions that a person with less education and financial security is at risk.” said Assistant Annette Quijano (D-20), the main sponsor of the bill in the Assembly. âIt is a discriminatory practice that we must end. We can no longer allow insurers to unfairly cut prices in our most economically vulnerable state. “
âEducation, credit scores and income have no bearing on ability to drive or insurance risk,â said Assembled Gary Schaer (D-36). âHouse Bill A-1657 requires that the pricing of insurance be determined solely by the responsibility of an individual and not by independent socio-economic factors. Through this bill, we will ensure that every driver has access to fair and affordable policies that keep New Jersey roads safe. “
While these factors do not overtly invoke race, pre-existing racial inequalities in educational, professional, and economic achievement guarantee the same result: Black and Latinx drivers in New Jersey are more likely to pay more or not have the means to pay for car insurance. , hampering their economic mobility. The same goes for working class consumers from all walks of life. A janitor with a perfect driving record is charged more for auto insurance than a doctor with a poor driving record.
âMy auto insurance is so expensive,â said Ashanti Howard, who is about to graduate from Rutgers University with an average of 3.9 GPA. âI pay 22% of my income as a security guard for auto insurance, which is comparable to what I spend about 2-3 months on food. I am responsible and have to drive legally to keep my job or face fines, financial risk and legal issues. When auto rates are unfairly based on credit scores, occupation, and education, it weighs on me, and other black and brown youth, to be able to strengthen their financial security. “
Dena Mottola Jaborska, Associate Director of New Jersey Citizen Action added, âWe cannot call a system fair when it penalizes people simply for being poor or from less advantaged backgrounds. The rich get richer while the poor get poorer, perpetuating the cycle of economic insecurity and poverty for our most disadvantaged families in New Jersey, disproportionately black and Latin families, and preventing them from securing a better future. and become the middle class of our state. “
Data released in December of last year by the Consumer Federation of America, from Quadrant Information Services, LLC, showed that drivers living in predominantly black and Latino zip codes in New Jersey pay 139% of the average premium. state fee of $ 1,459.69 for a 35- year-old driver with a clean driving record and other standard features. But drivers in predominantly white zip codes were paying only 93% of the statewide average premium. Auto insurance does not collect data by race, so extracting data by zip code gives us insight into the premium disparities between people of color in New Jersey and white drivers, and shows the effect of their use. socio-economic factors in the premiums.
âI never imagined it was something I even needed to know. As I came to learn it, I paid thousands of dollars every year for two decades unnecessarily, âsaid Cuqui Rivera, Executive Secretary of the Latino Action Network. âLast year alone, my annual renewal under Liberty Mutual would have been $ 2,997 for the year. Switching to CURE for the year, which has a clear policy against this unfair practice, costs just $ 1,188 with virtually the same level of coverage. I also know that this means that many of my own lawyer colleagues as well as the black and brown communities of New Jersey continue to pay insurance premiums far beyond their means. “
âNJ is a state where many people have to drive to meet their basic needs. A car is not a luxury, but a necessity. Janitors, security guards, airport workers, and school food service workers rely on their cars to get to and from work. However, although they can be good drivers, they can also pay higher premiums due to their level of education or their job, âsaid Kevin Brown, vice president and state manager of NJ at SEIU 32BJ. âThe more they pay for auto insurance, the less money they have to support themselves and their families. I urge the NJ legislature to pass the NJ FAIR Act so that the people of New Jersey are not discriminated against because of their level of education or their job. It is a question of racial and economic justice. “
Large disparities between Whites, Blacks and Latinos in educational attainment, professional and occupational level, and credit scores are well documented, underlying the disparities based on race and income revealed in this data. For example:
- The percentage of white adults with a bachelor’s degree or above is 29.3% compared to 17.7% for black adults and 13% for Latino adults. (US Department of Labor)
- Black and Latinx families are more likely to have lower credit scores than white families. In 2017, a study by the Urban Institute found that predominantly non-white areas in 50 of the 60 cities studied had median credit scores below 660. In comparison, predominantly white areas in only 4 of the 60 cities studied. had median credit scores below 660.
“In New Jersey, some 1.7 million residents work in occupations with a median annual income of less than $ 40,000, including retail sales, janitors and home workers,” commented Chuck Bell, director of programs for Consumer Reports. âThese workers are particularly likely to be required to pay higher auto insurance rates by some insurance companies for not holding a managerial or professional title – although they may be required to pay higher auto insurance rates. ‘excellent drivers without accidents or traffic violations. For example, in Hoboken, Geico cited a hypothetical cashier with no high school diploma a higher annual bonus of $ 455 than an identical driver with an executive job title and a graduate degree. “
Amy Torres, Executive Director of NJ Alliance for Immigrant Justice âNJAIJ is proud to support the FAIR Act, which would end the racist and classist effects of the auto insurance industry’s discriminatory pricing policies,â said Amy Torres of the New Jersey Alliance for Immigrant Justice. âWithout this legislation, New Jersey is perpetuating a system of segregation, where the cost of mobility is higher simply because of socio-economic factors that have nothing to do with road safety. As more and more New Jersey finds itself unemployed, with growing debt, or making tough choices between work and school, we call on the state to pass the FAIR Act now.
As a result of these socio-economic assessment factors, a considerable number of New Jersey residents pay extremely high auto insurance rates. A 2017 Personal Auto Insurance Affordability Study, conducted by the U.S. Department of the Treasury, found that auto insurance is not affordable for 2.3 million New Jersey residents. There are 82 postal codes (shown on the attached map) where the average auto insurance premium costs exceeded 2% of the median postal code income.
We support the Fair Act and see this as a great opportunity to reduce racial inequalities in this state, âsaid James Williams, Director of Racial Justice Policy at Fair Share Housing. âThe racial wealth gap exists not only for wages earned, but also for services paid. We see this as an opportunity to put more money in families’ pockets and in their homes. “
Carlos Medina, President of the Hispanic Chamber of Commerce of the State of New Jersey (SHCCNJ) added, “The SHCCNJ supports the FAIR Act and commends Senator Gill and MP Quijano for protecting New Jersey residents.
US Senator Cory Booker, Congresswoman Bonnie Watson Coleman and Michigan Congressman Rashida Tlaib introduced a similar bill, the Prohibiting Auto Insurance Discrimination (PAID) Act. The states of Massachusetts, New York, California and Michigan have already banned occupation and education as rating factors for auto insurance premiums, and Massachusetts, California, and Hawaii have banned the use of credit scores. Similar legislation is underway in states across the country.
New Jersey Citizen Action is a statewide human rights and social services organization that advocates for social, racial and economic justice for all, while meeting the pressing needs of low and moderate income New Jerseyens through education and direct services.
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