UPDATED: Mar 13, 2020
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How much do you pay for car insurance? Chances are, if you are black, you pay much more than a white person does.
According to the latest research, safe drivers in a black neighborhood will pay much more for auto insurance than a safe driver in a white neighborhood will.
In the study, the Consumer Federation of America compared auto insurance quotes from the five largest car insurance companies in the United States. What they found was that good drivers in black communities paid more for auto insurance than good drivers in white communities, even when things like income and population density remained the same.
Black Females Pay More For Auto Insurance Than White Females
To compare the prices for the white and black neighborhoods, the Consumer Federation created a fake driver profile who was used to obtain quotes. This fictional person – a 30 year old single woman with a “Fair” credit rating, a clean record, no policy lapses, a good job, and a rental apartment – sought premium quotes from the five aforementioned companies using addresses in both predominately black and white neighborhoods. The quotes obtained were for a basic, state-minimum auto insurance policy.
The results were sadly as expected. On average, the hypothetical black female was to pay considerably more for auto insurance than the hypothetical white female. To be precise, if your neighborhood is 75% black (or higher), you can expect to pay 70% more for auto insurance. According to the study, the fictional white girl would supposedly pay just $622 annually for auto insurance. The fictional black girl would pay $1,060 annually.
In response to this study, the director of financial services for the Consumer Federation of America said:
“These findings suggest a troubling pattern of high rates in African-American communities regardless of driver history. We are not rushing to judgment about why this happens, but it is urgent that regulators, lawmakers, and the industry take a hard look at these findings and address the impact of high auto insurance prices on drivers living in predominantly African-American communities.”
Another Study Shows Black Males Pay More For Auto Insurance Than White Males
Last year, 4AutoInsuranceQuote.com conducted their own survey of black, white, and asian drivers to see if their theory that black people paid more for auto insurance was correct. After surveying 600 men from all different races, their theory held true: black men pay the most for auto insurance.
According to the survey results, black men in New York City paid $2910 on average for auto insurance. White men in New York City paid $2193 on average for auto insurance. In other words, black men have to pay more than $700 more than white men for the same auto insurance coverage.
In response to the study, the 4AutoInsuranceQuote CEO said:
“Not only did black people pay the most for car insurance, they paid the most by a landslide. It was something that really concerned us… It’s something that should concern all Americans.”
Diverse Neighborhoods Pay More For Auto Insurance Too…
According to the Consumer Federation of America, it appears that just having black people in your neighborhood could spell trouble for your auto insurance rates. If your neighborhood is predominantly black (between 50%-75% African American), the average driver in America would spend $831 annually on auto insurance. If your neighborhood is predominantly white, on the other hand, your insurance rates will drop down to $768 annually. In the eyes of insurance companies, apparently being black comes with a cost.
But Not As Much As Black Neighborhoods
In big cities and dense urban neighborhoods, auto insurance rates tend to be higher because of things like crime, theft, vandalism, and traffic. With that being said, in dense black urban communities, auto insurance rates are much higher than in dense white urban communities. Residents of the black zip codes can expect to pay $1,797 per year for auto insurance. Residents of the white zip codes pay $1,126, an annual difference of more than $600.
If you are thinking that the price difference is because white neighborhoods in big cities tend to be wealthier than black neighborhoods in big cities, think again. The Consumer Federation also compared predominantly white middle-class neighborhoods with predominantly black middle-class neighborhoods of the same income range ($63,000-$102,000 annually). What they found was that black people still paid more for auto insurance. The middle class black neighborhoods paid $2,113 per year on average. The middle class white neighborhoods paid just $717 per year on average. This difference – over over $1300 annually – not only is staggering, it’s sad.
What we can learn from this data is that white privilege in America is still alive and well. Unfair auto insurance rates are just a small example of the many inequalities that plague black people in the United States. As consumers, black people are constantly being taken advantage of in this country. For example, a recent study showed that blacks were more than twice as likely to be rejected on a mortgage application than whites. Black people, as you might have guessed, are also far more likely to be pulled over by police. By talking about these injustices, hopefully we can shed the light that will bring about change.