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A discriminatory practice has some paying more for their car insurance

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Candid medium range photograph of a Mexican man looking at the camera with a neutral expression while seated behind the wheel of car painted light blue on the upper half and red on the lower.
Frederik Trovatten.com
Because people are unaware of the impact socioeconomic status has on auto insurance rates, major insurance companies are able to use discriminatory tools to determine pricing.

It's not just what you drive and how well you drive that determine your insurance rate. Factors that have nothing to do with a person's driving record are disproportionately affecting Black and Latinx drivers.

A consumer's socioeconomic status is a proxy for race, according to one consumer advocacy group, and it's why minorities often pay higher auto insurance premiums.

A 2017 examination of the auto insurance industry uncovered that behaviors not related to driving factored into rates.

Details such as zip code, credit score, martial status, education, occupation and more, can drive up premiums.

Michael DeLong with the Consumer Federation of America said not much has changed in the four years since the study.

Of the non-driving factors, "credit information seems to be the biggest," said DeLong.

A person with a perfect driving record but bad credit will pay significantly more than a person with a perfect driving record and good credit.

Zip codes also play a key role, something insurers say fairly accounts for population density.

"Consumer Federation of America and other consumer advocacy groups have conducted studies and we've found that even after controlling for population density, mostly African American neighborhoods and zip codes and Hispanic neighborhoods and zip codes wind up paying significantly higher premiums," argued DeLong.

DeLong recommends consumers shop around for their auto policy but warns that all major insurance companies are "bad actors" when it comes to factoring credit scores into premiums.

He also suggests contacting your state's insurance commissioner and legislators to request a ban on the use of non-driving factors in calculating rates.

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When I host Up To Date each morning at 9 a.m., my aim is to engage the community in conversations about the Kansas City area’s challenges, hopes and opportunities. I try to ask the questions that listeners want answered about the day’s most pressing issues and provide a place for residents to engage directly with newsmakers. My email is steve@kcur.org.
Reginald David is an assistant producer with Up To Date. You can reach him at reginalddavid@kcur.org.
Elizabeth Ruiz is a freelance producer for KCUR’s Up To Date. Contact her at elizabeth@kcur.org or on Twitter at @er_bentley_ruiz