African American drivers pay 41% more for car insurance than whites in Flint; good-driver prices differ with Allstate, Farmers, GEICO, Progressive & State Farm
Black drivers in Detroit and Flint, Michigan, and in communities across the U.S. are paying more for car insurance than white drivers.
A lot more.
In its study, “High Price of Mandatory Auto Insurance in Predominantly African American Communities,” the Consumer Federation of America described the magnitude of this shameful, inexcusable disparity:
“[G]ood drivers living in predominantly African American communities [“where more than three quarters of the residents are African American”] will pay, on average, 70 percent more for state-mandated minimum liability-only coverage than a similarly-situated driver in a predominantly white community … ($1,060 vs. $622).”
Significantly, the study showed that the price disparity between black drivers and white drivers persisted regardless whether the community was urban, rural or upper middle-income:
- Auto insurance prices are 60% higher in predominantly black urban communities than in predominantly white urban areas: “In the densest urban communities, the [“good driver”] average premium in predominantly African American ZIP codes [greater than “75% African American”] is 60 percent higher than the average premium in equally dense predominantly white urban ZIP codes ($1,797 vs. $1,126).”
- Drivers in predominantly black rural communities pay 23% more for auto insurance than drivers in predominantly white rural areas: “In rural ZIP codes, the average [“good driver”] premium in predominantly African American ZIP codes is 23 percent more than the average premium in rural, predominantly white ZIP codes ($669 vs. $542).”
- Good drivers in predominantly black upper middle-income communities pay car insurance prices that are 194% higher than predominantly white upper middle-income communities: “The average [“good driver”] premium in upper middle-income [“where median household income ranges between about $63,001 and $101,685”], predominantly African American ZIP codes is 194 percent higher than the average premium charged to a similarly situated driver in an upper middle-income, predominantly white ZIP code ($2,113 vs. $717).”
As for Michigan, the CFA study concluded:
“The disparity of premiums is more than 50 percent [in Detroit and more than 40 percent in Flint] between predominantly African American and predominantly white ZIP codes.”
Importantly, the CFA also identified the car insurance companies for whom price disparities between good black drivers and good white drivers exist:
“All five companies” — Allstate, Farmers, GEICO, Progressive, and State Farm, which are “five of the largest companies by national market share” — “had average premiums that are at least 50 percent higher in predominantly African American ZIP codes than in those with few African American residents.”
Why do we allow car insurance companies to legally discriminate against black drivers in Detroit and Flint?
I’ve previously written that how car insurance companies use credit scoring and redlining in cities like Detroit amounts to legalized discrimination.
I’ve also called the high price of car insurance in Detroit a civil rights issue. The CFA study only makes me more certain of this.
For all the (Republican) politicians in Lansing who claim that No-Fault reform is their top legislative priority, I hope they’ve ready — and willing — to put as much effort into resolving how black residents in cities like Detroit and Flint are treated when buying car insurance as they are in pursuing the boondoggle wish lists of the auto insurance industry.
Examples of car insurance price disparities between black and white drivers in Michigan?
The CFA study found that among the 30 “metro areas” throughout the country “with the highest differences in auto rates between predominately white and predominately African American communities,” two Michigan areas were in the top 10:
- #5 was Detroit-Warren-Livonia where car insurance rates were 60% higher in predominately African American communities compared to predominately white communities.
- #10 was Flint where car insurance rates were 41% higher in predominately African American communities compared to predominately white communities.
What car insurance companies overcharge black drivers most?
The CFA study found the following with respect to the country’s five largest auto insurance companies based on national market share — Allstate, Farmers, GEICO, Progressive, and State Farm:
- “Progressive and Farmers Insurance both had average premiums [for equally good drivers] that were 92 percent higher in predominantly African American ZIP codes than predominantly white ZIP codes.”
- “State Farm, Allstate and GEICO also charge substantially more,” 63%, 56% and 52%, respectively, in predominantly black communities versus predominantly white communities.