Unfair at Any Speed - Good Drivers Deserve Low Rates, Not ‘Discrimination’

Car insurance is a unique field in that it openly "discriminates" on the basis of age, gender, marital status, and residence. But there's a reason the word "discrimination" appears in quotes - courts have routinely upheld that basing car insurance rates on these factors is not discriminatory, since they have actuarial merit. This means that it can be statistically proven that seniors and teens are worse drivers than people ages 30-50; men are worse than women; singles are worse than married people; and city-dwellers get in more accidents than rural folk.

All of these statements are "in the aggregate," meaning that there are certainly exceptions to them - and this is the reason that people consider them discriminatory. After all, if it were true that Vietnamese people were in more accidents than Burmese, would it be fair to automatically give every Vietnamese person a worse deal? Of course not - that would be racial discrimination, and on the issue of race, the courts have come down differently. Consumer advocates in Florida, however, are alleging that people in that state (and many others) are the victims of legitimate discrimination and that something needs to be done about it.

When Does 'Discrimination' Become Discrimination?

The theory is that minorities - "in the aggregate" - earn less than non-minorities, and that by using income to determine car insurance rates, car insurance companies could, in effect, discriminate on the basis of race. Whether or not this is true, most would agree that poor people of any race should not be the victims of discrimination, and that they certainly shouldn't be made to pay more than their rich counterparts. Think about it: High income earners pay a higher percentage of their income in taxes, and most people think this is fair. Others think that everyone should pay the same percentage in taxes, but no one would suggest that everyone should pay the same nominal amount. Car insurance and taxes are two completely different things, so few people would suggest that rich people should pay a higher percentage of their income for car insurance or even an equal percentage. But for them to pay less for car insurance in nominal terms simply because of their wealth is obviously unfair, right?

Courts have agreed and ruled that income cannot be used by car insurance companies to determine rates, but they've found a way to get around it by basing rates on profession and education level. After all, an engineer with a Ph.D. is certainly likely to earn more than a mechanic with no high-school diploma. If they're equally safe drivers, should the mechanic pay more? Well in Florida, he would - a lot more. All other things being equal - age, residence, gender, marital status, driving record, etc. - a Ph.D. engineer in Florida would pay $1,403 to insure a 2000 Chevy Malibu, while a high-school-dropout mechanic would pay a staggering $4,225! That's an increase of more than $2,800! "It's just another way auto insurers are trying to price poor people up and rich people down," says Robert Hunter, director of insurance for the Consumer Federation of America.

What's a Consumer To Do?

The good news is that not all companies use your education and employment information. In Florida, for example, Geico does, but Progressive doesn't. Progressive does in Colorado and other states, though. Allstate doesn't in Florida, but might elsewhere. On and on and on and on… The only way to make sure you're getting the best rates that you can is to shop around. When it can mean savings of up to $233 a month, it certainly is worth it, and carinsurancerates.com makes it easy. Good luck!