Consumer Advocates Release Report on Redlining in Auto Insurance in Maryland

The nonprofits Maryland Consumers Rights Coalition (MCRC) and the Consumer Federation of America (CFA) have released a new report illustrating today’s version of redlining in Maryland: The use of zip codes — instead of driving records — to set auto insurance premiums. The report reveals the extraordinary price disparities faced by safe drivers in communities of color compared with those in predominantly white communities, even by people with pristine driving records. HB1251/SB805, sponsored by Del. Alonzo Washington (D-22) and Sen. Douglas J.J. Peters (D-23), will correct these inequities. SB805 will be heard by the Senate Finance Committee on March 3.

Jack Gillis, executive director of Consumer Federation of America said of the legislative effort to correct this problem:

“Since Maryland requires all drivers to purchase insurance, it has a special responsibility to ensure affordability. This bill is a long overdue reform that will reduce unfair discrimination and ensure that drivers pay premiums based on their actions, not their neighborhoods.”

In Maryland, auto insurance companies are not allowed to use race or income to set premiums; however, auto insurers can use a number of non-driving rating factors that are proxies for race and income. A driver’s home zip code is used as a primary factor in setting an individual’s insurance premium. Auto insurance is required in Maryland but not always affordable for lower-income workers —…