Coalition renews calls for law banning discriminatory auto insurance pricing as millions of NJ drivers face rate hikes in 2023 

Trenton—A coalition of consumer, business, anti-poverty, racial justice, and immigration advocates today called on state lawmakers to advance legislation banning discriminatory auto insurance pricing practices, as millions of New Jersey drivers face an average premium increase of $125 in 2023. 

A new law that took effect January 1 requires drivers to maintain higher minimum liability coverage for their auto insurance policies. Meanwhile, the Fairness in Auto Insurance Rate (FAIR) Act (S 357/A1674), which would ban factors such as credit history, education and occupation in pricing auto insurance, has yet to advance in the New Jersey Legislature this session. These factors act as proxies for race and socio-economic status, inflating auto insurance costs for drivers of color and low-income drivers. These same drivers will be hardest hit by the new insurance requirements.  

“New Jersey drivers who are already being charged unfairly high rates should not be required to pay more for basic liability coverage without addressing this discriminatory insurance industry practice,” said Maura Collinsgru, Director of Policy and Advocacy for New Jersey Citizen Action. “Passing the FAIR Act will help lower costs for consumers, reduce discrimination, and help ensure everyone in New Jersey can afford the coverage they need.” 

“New Jersey leads the nation with some of the starkest racial and economic disparities,” said Racquel Romans-Henry, Policy Director for Salvation and Social Justice. “The fight for fairer auto insurance practices reminds us that there isn’t a sector in our society that has not been informed by structural racism. Elected officials cannot claim to be champions of equity and justice without acknowledging and remedying the discriminatory and predatory auto insurance practices that continues to contribute to the economic strain and hardships experienced by so many Black and low-income communities.” 

Auto insurance pricing disparities in New Jersey are stark, with low-income and Black and brown drivers generally paying the highest prices. In New Jersey and many other states, insurers can use non-driving factors such as a person’s credit history, level of education, and occupation to determine how much they’ll pay for coverage. This results in drivers of color and low-income drivers being charged higher rates than wealthier drivers, even when they have better driving records than those wealthier drivers.  

“Pricing auto insurance based on these non-driving factors penalizes people for facing economic disadvantages, like having a lower credit score or a less lucrative paying job,” said Chuck Bell, Advocacy Director at Consumer Reports. “A 2021 CR investigation found that  many insurers charge higher premiums to people with less education and lower-paying job titles, even if they are excellent drivers. That’s unjust and should be banned in New Jersey.” Consumer Reports found that in Hoboken, NJ, for example, Geico quoted a hypothetical cashier without a high school degree an annual premium that was $455 higher than an identical driver who was a vice president of a supermarket chain with an MBA. 

Even without the minimum liability price increase, an estimated 2.3 million New Jerseyans (or one in four residents) living in low-and-moderate-income ZIP codes and communities of color are struggling to pay for auto coverage. In 2021, Consumer Federation of America (CFA) analysis of insurance industry data found that for drivers with a perfect record, a poor credit score would add an average of $1,311 (or 156%) to annual premium costs compared to those with excellent credit. Additionally, CFA found that drivers with a clean driving record in majority Black and Latino ZIP codes in NJ pay an average of nearly $700 more per year for insurance than drivers in majority white ZIP codes. 

The organizations supporting the Fairness in Auto Insurance Rate coalition include: 

New Jersey Citizen Action
Anti-Poverty Network
BlueWave New Jersey
Consumer Federation of America
Center for Economic Justice
Consumer Action
Consumer Reports
Consumer Watchdog
Hispanic Statewide Chamber of Commerce
Indivisible Cranbury
Integrated Justice Alliance
Ironbound Community Corporation
Latin American Legal Defense and Education Fund
Latino Action Network
Latino Action Network Foundation
Laundry Workers Center
Lutherans Engaging in Advocacy Ministry
Make the Road New Jersey
National Association of Social Workers – New Jersey Chapter
National Consumer Law Center
National Domestic Workers Alliance
National Organization for Women of New Jersey
New Jersey Alliance for Immigrant Justice
New Jersey Appleseed
New Jersey Institute for Social Justice
New Jersey Policy Perspective
New Jersey Prison Justice Watch
New Jersey Working Families
New Jersey Tenants Organization
Returning Citizens Support Group
Salvation and Social Justice
SEIU 32BJ
Stand Central New Jersey
The African American Chamber of Commerce of New Jersey
Urban League of Essex County
Urban League of Union County