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.
- Michael DeLong, research and advocacy associate, Consumer Federation of America
