Fair and Affordable Auto Insurance Rates Campaign
(Also See: Insurance, Banking and Community Reinvestment Campaign and Foreclosure Prevention)
Welcome to NJCA's Issue Campaign focused on Fair and Affordable Auto Insurance Rates. This Campaign was originally included as part of our Insurance, Banking and Community Reinvestment.
For more information, contact Ev Liebman at ev@njcitizenaction.org or 856-966-3091.
Fair and Affordable Auto Insurance Rates for NJ Drivers
GEICO and other major auto insurance companies doing business in New Jersey use education, occupation, home ownership and insurance score (largely based on credit score) as criteria for setting your auto insurance rates. The use of such factors is discriminatory and must be banned. These factors serve as proxies for race and class, resulting in lower-income people and minorities being charged disproportionately higher rates.
Legislation pending in the NJ State Legislature would curb the use of these discriminatory rating factors.
- A-3202 (read the full text) — sponsored by Assemblywoman Bonnie Watson Coleman (D-15), would outlaw the use of education and occupation in auto insurance underwriting.
- A-3447 (read the full text) — sponsored by Assemblywoman Bonnie Watson Coleman (D-15), would require that auto insurers notify consumers when they are rejected from the company's most favorable group and placed into a group offering higher rates.
Passage of these bills is a necessary step to promoting transparency in NJ's auto insurance market and to ensuring that NJ consumers are not subject to the use of discriminatory auto insurance rating factors. Similar legislation has been supported by State Senators Nia Gill (D-34) and Joseph Vitale (D-19) past years.
NJ Citizen Action urges the NJ State Legislature to pass these important bills.
Take Action! Urge your Members of the Assembly to support A-3202 and A-3447. Help us bring more fairness and transparency to NJ’s auto insurance market!
Audio: Eve Weissman's Newsradio interview, on auto insurance rates, with Levon Putney, WCBS Newsradio 880's New Jersey Beat Reporter: in both m4a format and (same audio) mp3 format.
Phase Out of "Take All Comers"
As of January 1, 2009, New Jersey's auto insurance environment has dramatically changed. Prior to January, 1, 2009, a law called "Take All Comers" required that NJ auto insurance companies accept all "eligible" drivers. Eligible drivers were defined primarily by a person's driving record. NJ auto insurance companies were required by law to offer insurance to a driver with fewer than seven insurance eligibility points on his or her record.
However, new regulations proposed and implemented by the NJ Department of Banking and Insurance (DOBI) phase out the "Take All Comer's" law allowing auto insurers operating in our State to set their own acceptance criteria to determine whether they insure drivers — regardless of their driving record. Now, auto insurance companies will be able to reject a driver with a completely clean driving record.
TAKE ACTION! Call the NJ Department of Banking and Insurance: 1-800-446-7467 and press 2 for consumer complaints:
Tell DOBI that the phase out of "Take All Comers" is the WRONG direction for NJ's auto insurance market. People with totally clean driving records SHOULD NOT be rejected by auto insurance companies!
The new regulations also allow explicitly and for the first time the ability for NJ auto insurance companies to base their rates upon a driver's education level, occupation, and insurance score — factors that are clearly and undeniably proxies for race and class.
The "Take All Comers" phase out is a result of NJ's 2003 auto insurance reform legislation which was passed in reaction to the New Jersey auto insurance crisis of 2002. Six years later, that crisis has ended due to a countrywide reduction in overall accidents reported to the industry and countrywide levels of increased profitability for auto insurers since 2003. These new regulations serve to help the already profitable auto insurers at the expense of consumers.
New Jersey must not turn a blind eye to the discriminatory and unfair practices of major auto insurers in the State. Lower income New Jersey drivers will be forced to pay the high price for the lack of protection against the use of rating factors are that simply proxies for race, class and income, or inevitably be forced to drive uninsured.
NJCA Releases Report Documenting the Discriminatory Price Impact GEICO's Use of Education and Occupation has on Lower Income and Minority Drivers
NJCA's Report documents the discriminatory price impact of GEICO's use of education and occupation in determining consumer auto insurance rates. NJCA researches found that education and occupation alone can impact your rate quote regardless of your driving record.
NJCA obtained over 400 rate quotes from GEICO's well-publicized website and compared rate quotes for consumers with different education and occupational status. The study illustrates that GEICO assigns people higher rates due to lower educational attainment and nonprofessional jobs.
Of the rate quotes analyzed, NJCA found that:
- The average rate quote for consumers without a Bachelors degree (consumers having a high school or vocational degree) is 19% higher than the average rate quote for consumers with a Bachelors degree (or higher educational degree);
- The average rate quote for consumers with a nonprofessional job is 27% higher than the average rate quote for consumers with a professional job;
- Some comparisons revealed that lower education level alone produced as much as a 61% higher price quote compared to someone with a college degree, even when all other factors stayed the same.
Hidden Auto Finance Markup
New Jersey car buyers have been charged tens of millions of dollars in undisclosed "finance markup charges" when they have financed their cars at automobile dealerships, according to findings highlighted in a new report released by NJCA. And the nation-wide practice of the markup has also led to a well-documented trend of discrimination against African-Americans and Hispanics in New Jersey.
NJCA has called on New Jersey State Attorney General Peter Harvey to investigate and propose corrective action to this unfair and discriminatory practice.
Read our press release, the full report "Hidden Auto Finance Markup: The Costs and Impact on New Jersey Consumers," and a summary sheet of the report.
Wheels in Motion Program
NJCA has an exciting new pilot program, Wheels in Motion, for young apprentices who need access to affordable cars and auto insurance.
By combining below-market rate auto loans, discounted auto insurance and financial education classes, Wheels in Motion will help young adults purchase cars to get them to their jobs.
- Press Release.
- News Coverage: "New Jersey Citizen Action Rolls Out Wheels in Motion" (High Point – September 11, 2010), "Palisades Group Joins Citizen Action's Wheels In Motion Program" (High Point – September 10, 2010), "'Wheels' Revs Up Young Mechanics" (Star-Ledger – August 18, 2005).