Controversy Surrounding Non-Driving Factors in Auto Insurance Rates
Thursday, June 29th, 2023 Auto Legislation & RegulationNew Jersey resident Anna ‘Cuqui’ Rivera, a high school graduate who works as a labor and civil rights activist and moonlights as a DJ, was paying almost $3,000 annually for auto insurance with one of the big companies. Now, she pays almost $2,000 less for coverage on her 2016 Jeep.
The difference? Her new, smaller insurance company doesn’t take into account her education level or occupation in setting her rate.
A bill in the New Jersey Legislature would prohibit all auto insurance companies from considering ‘non-driving’ factors such as education, occupation or credit score in determining rates. A handful of states already have such bans, and more states have been considering them.
Currently, most insurance companies use those criteria, along with driving records, mileage driven and other factors including age and gender to set rates. Consumer advocates say using non-driving factors punishes people with lower incomes and people of color, who disproportionately have lower education levels, hold lower-paying jobs and have lower credit ratings.
Insurance companies argue that if they didn’t consider those criteria, everyone’s rates would increase, including those who already have high premiums.
