Auto Insurance Rates Are Higher In Minority Areas, Study Finds

“A recent report suggested that people living in minority neighborhoods may have to pay 30% more on their auto insurance quotes”

A recent study that analyzed auto insurance data of California, Illinois, Missouri and Texas found the disparity in rates between minority zip code and mostly white one. In some cases, Geico, Allstate, and Liberty Mutual surcharge drivers 30% higher in premium despite the law against discrimination that applied in almost every state.  Since minorities usually lag behind white ones in income, they are under pressure to pay the higher auto insurance rates just because they live in a wrong zip code. Marta Matello, Consumer Report’s CEO said that this high premium can result in a drain in the household budget, stagnant growth in communities, and limit employment opportunity.


The study found that 33 out of 34 insurers in Illinois charge minority neighborhoods at least 10% higher than white one. Six of them even bump this up to as much as 30%. Missouri and Texas’s insurers seem also guilty of surcharging approximately 10%. In California, where insurers are under a tighter regulation, the same pattern of minority neighborhood receiving a higher premium can be found.

Auto insurance coverage is required by law in all states to be able to drive. If some drivers cannot afford the premium, they can be fined for driving without insurance and get their licenses suspended. Since the vehicle is essential in their day-to-day commuting, they might be locked up in jail for driving without a license.

The Insurance Institute trade group had hired an independent expert to review the study’s data and came to a conclusion that it is “flawed” and accused ProPublica of giving out a questionable conclusion based on a weak study.

How to find affordable auto insurance providers

When the debate hasn’t come to an end yet, it’s best to take the matter into your own hand and find out the premium that you can handle. Shopping around is a classic mean but still works well. Go online and make a list of options, both with national and regional insurers. Then narrow the list down to a few names that you think are suitable for your current financial situation. This can be a bit time consuming but will ensure you get the best deal for your car.

When you have chosen for yourself an insurer, it’s time to tailor-made your insurance to cut the cost down. It might be tempted to buy the packages that cover almost everything you may ever need but they would come with a hefty bill. The most effective way to fall for the unnecessary is to write down exactly what you want and avoid doing your thinking when a broker is breathing down your neck.

More way to save on car insurance

Another thing to remember is never let your insurance policy lapses. This might lead to higher premium and serious financial crisis if you get into accidents. Setting your deductibles as high as you can afford is another great way to lower your monthly premium. But don’t push it too far. Before you settle into an auto insurance contract, make sure that you have saved at least $1000 to $5000 for your deductibles. If you are financially comfortable and are willing to pay for damages from a claim, you should consider raising your deductibles. But first, let’s do the math. Are you willing to pay $500 to $1000 for a claim to save $30 a year? The thing is the more costly your insurance, the more you will save by raising the deductible.

How to save on car insurance if you don’t drive much

Pay-per-mile auto insurance is gaining its popularity recently. It is a great way to save on premium for those who don’t drive much. This type of insurance’s premium is calculated based on how much time one spends behind the wheel. A small device is fitted into one’s OBD II-port to securely count the miles to determine your monthly bills. When it comes to pay-per-mile insurance, the firms only care about how much you drive and exclude other driving factors such as how fast you go or how hard you brake. Metromile also provides an app that monitors the car for you to help you keep track of your trip, where your car is parked and many more.

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