June 06, 2023

Reps. Takano, Watson Coleman, Tlaib Reintroduce Legislation to End Discrimination in Automobile Insurance Rates

WASHINGTON, DC (June 6, 2023) - Today, Representatives Mark Takano (CA-39), Bonnie Watson Coleman (NJ-12), and Rashida Tlaib (MI-12) reintroduced a bill to ensure insurance companies use only driving-related factors in determining car insurance rates and eligibility. The Prohibit Auto Insurance Discrimination Act, or PAID Act would end the use of income, credit score, education levels, and other factors unrelated to driving history and ability, preventing insurance companies from using these details to raise rates for low-income individuals, non-homeowners, and others who otherwise have good driving records.

“Insurance companies’ consideration of non-driving related factors in determining their rates creates a system where drivers are unfairly punished, charged higher insurance rates, and ultimately discriminated against because of conditions independent of their driving history. It’s past time to end this harmful and predatory practice, which is why I’m joining Representatives Watson Coleman and Tlaib to reintroduce the PAID Act,” said Representative Takano. “The PAID Act will empower individuals with good driving records, ensuring fair and affordable coverage for all."

“We have to acknowledge that we’ve allowed systems in this country to decimate the earnings and lives of those least able to afford it and least able to speak up for themselves. Car insurance pricing practices are part of the problem. Car insurance is a necessity for most American families, and many of them are being charged higher rates for unfair, undisclosed, and unproven reasons,” said Congresswoman Watson Coleman. “Income proxies like where you work or whether you have a college degree don’t weed out bad drivers — they just create a two-tier system where those who make less get charged higher rates. Working families deserve a system that is fundamentally fair. I’m proud to work with my colleagues Reps. Tlaib and Takano on legislation like the PAID Act to level the playing field that has been tilted against working families for far too long.”

“Auto insurance discrimination continues to keep our residents in the cycle of poverty,” said Representative Tlaib. “Your education level, zip code, and marital status doesn’t determine your driving ability and neither does your credit score. Yet our neighbors, especially in Detroit, regularly face higher auto insurance rates than folks in predominantly white zip codes. Someone with a perfect driving record and poor credit can pay hundreds of dollars more for auto insurance—sometimes twice as much. We must stop these predatory and discriminatory practices by auto insurance companies. I am so grateful to partner with Congresswoman Watson Coleman and Congressman Takano to introduce this important legislation.”

Ever more frequently, insurance companies use so-called income proxies to set automotive insurance rates, despite no evidence to indicate such factors identify risky drivers. Use of these proxies results in higher rates charged to lower-income drivers while more affluent drivers see savings, costing working families billions of dollars each year. The PAID Act would ban these practices by:

·         Barring the use of the following characteristics for calculating rates or deciding eligibility:

·         Education;

·         Occupation;

·         Employment status;

·         Home ownership status;

·         Credit score, consumer report;

·         Gender;

·         Zip code or adjacent zip codes;

·         Census tract;

·         Marital status;

·         Previous insurer, or

·         Prior purchase of insurance.

·         Empowering the Federal Trade Commission (FTC) to enforce these prohibitions, and set the necessary regulations to do so.

The PAID Act is supported by: Alaska PIRG, The Center for Economic Justice, Consumer Action, Consumer Federation of America, Consumer Reports, Consumers for Auto Reliability and Safety, Economic Action Maryland, Florida Consumer Action Network, Georgia Watch, Texas Appleseed, Americans for Financial Reform, Consumer Federation of California, Illinois PIRG, Minnesota Asset Building Coalition, Oregon Consumer Justice, Public Citizen, Real Reform Louisiana, and Vehicles for Change.

"The PAID Act is an important bill that would greatly reduce auto insurance premiums for consumers,” said Mike DeLong, Research and Advocacy Associate at the Consumer Federation of America. “Currently many people are charged hundreds or even thousands of dollars more based on these variables, even though they aren't related to driving. Your auto insurance premium should be based on your driving behavior, not your credit score or your job or whether you graduated from college.” 

Every state except New Hampshire and Virginia requires drivers to maintain car insurance, making it essential for families that rely on a vehicle to get to work, pick up groceries, or drop their children off at school.

To see the bill in its entirety, click here.