NJ auto insurance costs more for renters, workers, and non-college graduates. It’s discrimination, activists say.

Cuqui Rivera, of North Brunswick, hasn’t had a car accident in at least two decades. She didn’t get a ticket. Her only interaction with her car insurance company was to write them a check, which she did religiously. She was a model driver when it came to insurance coverage.

Or at least she thought she was.

Then, a few years ago, Rivera heard that insurance companies weighed things like creditworthiness, education, and employment when deciding how much to charge, and she decided to review it.

When her policy came up for renewal, Rivera dropped Liberty Mutual and switched to CURE auto insurance, which the company and activists say is the only one in New Jersey that doesn’t include these things in its rates. Her annual bill for a car and the same coverage, she said, went from $2,997 to $1,188.

Rivera says she has a good idea why she’s been charged so much more for so many years.

“That’s because I (only) have a high school diploma,” Rivera said.

What most Jersey drivers in a state with more than 5.9 million vehicles may not know is that car insurance isn’t based solely on their driver’s license or where they live. Insurers also check your credit history, what you do for a living, whether you’re married, whether you own a home, and whether you have a college degree.

And those factors can vary astonishingly, according to a 2015 Consumer Reports study.

The study found that a janitor with a perfect driver’s license and terrible credit could actually pay $37 a year more for insurance than a doctor convicted of drunk driving but with excellent credit.

“We’ve had a very difficult time getting people to understand,” said Maura Collinsgru of New Jersey Citizen Action. “It’s very difficult for people to figure that out. It’s not like you get a detailed list and if you did it would be quite enlightening.”

A recent study showed how New Jersey rates are set and most of the country discriminates against minorities.

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Supporters of legislation that would ban the use of education, occupation, homeownership status, marital status or creditworthiness in determining insurance rates are cautiously optimistic that forthcoming rate increases will breathe new life into insurance premiums for up to 1.2 million low-insured drivers Bill that has lingered in Trenton for years.

Both the Insurance Council of New Jersey, a nonprofit group that represents auto insurers in the state, and the state Department of Banks and Insurance, which oversees insurers, recognize that companies use these metrics to determine rates. But to what extent is unknown, since these are trade secrets.

Liberty Mutual, which insured Rivera, said it “considers dozens of factors when determining a customer’s overall risk” and “is committed to providing drivers with fair and affordable auto insurance options.” But the spokesperson, Gregory Kessler, declined to say how much they weigh credit scores versus other metrics like education and employment.

Good government advocates say the current practice is discriminatory. According to a 2020 Consumer Federation report, Blacks and Hispanics in the state are more likely to rent a home than own a home, be widowed, divorced or never married, have a high school diploma or less, and work in one of America’s service occupations.

The debate about this has been raging in New Jersey for years. State Sen. Nia Gill, D-Essex, sponsored legislation back in 2006 to ban insurers from using these metrics. She is the main sponsor of the current bill, which still has to be negotiated this year.

Only three states — California, Hawaii, and Massachusetts — prohibit credit as a factor. California, Massachusetts, Michigan and New York prohibit education and employment.

Rivera, a longtime activist, never considered switching airlines for all the years she paid more every month. Money that could have been better spent on their children and grandchildren. She wasn’t alone.

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According to the Consumer Federation of America report, black-majority ZIP codes pay 49.5% higher premiums as compared to white-majority zip codes. ZIP codes in the majority of Latinos pay 50% more and low-income ZIP codes pay 51.5% more than majority ZIP codes.

“They have really detrimental effects on consumers,” said Michael DeLong, a research and advocacy officer for the group. “This is just having a really big impact on Black and Hispanic consumers.”

The group compared rates for a 35-year-old driver with a clean record who wanted to insure a 2011 Honda Civic in 2020. It showed that people with excellent credit pay an average of $842 a year, compared to $1,384 for that fair credit and $2,153 for bad credit. A clean record with good credit versus a clean record with bad credit was a 156% increase.

The New Jersey Insurance Council defends the current practice and opposes the proposed legislation. Insurers, by and large, say that such factors predict motorists’ risk of damage.

“The ICNJ has an opinion on the use of risk-based pricing variables, and that means we strongly support allowing them to be used,” said Christine O’Brien, the group’s president.

“Insurance companies use a combination of numerous factors to secure the best rate, and ultimately premium, for all drivers,” she said. “New Jersey legislature … that seeks to prohibit certain variables does not recognize that such factors have repeatedly been found to be actuarially warranted, risk-predictable, and not unduly discriminatory.”

But critics don’t believe it. Including CURE auto insurance CEO Eric Pou, who has long been a voice against the practice.

“If you’re rich and have more wealth, you’ll get a better price,” Pou said. “The worst kind of racism is silent political racism.”

Pou said his company decided not to use educational, occupational and credit scores after the state allowed insurers to do so about two decades ago.

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The 2020 Consumer Federation of America report also showed large disparities based on where drivers live. Fair credit in Princeton? The 35-year-old driver with a clean record looking to insure a 2011 Honda Civic could expect to pay $1,200. Moving to Trenton? They would pay $1,851 and if they moved to Newark it would increase to $2,120. Bad credit in Newark? The cost increases to $3,376.

Should drivers who live in densely populated cities, don’t park their cars in garages and may be more vulnerable to swiping or burglary pay more? Proponents of change, of course, agree.

“The density and your zip code would affect your car insurance premium. But the big price differences we’re seeing are way, way too big to explain,” DeLong said. “Your location should make a difference, but those gaps are just too big.”

Travel costs in New Jersey are increasing.

Starting January, up to 1.2 million drivers who currently have $15,000 liability coverage will have to pay more for the new $25,000 minimum coverage. Insurers say it’s about $125 more a year these people have to pay.

In 2026, the minimum coverage is set to increase to $35,000.

More recently, legislation was quietly introduced that would raise the minimum personal injury coverage from $15,000 under current law to $50,000.

The added expense has some people alarmed at a possible unintended consequence: more people on the road who simply don’t have insurance.

“40 percent of the people who leave me don’t have insurance because they just can’t afford it anymore,” Pou said.

“Actually, it’s worse for everyone because it indirectly drives up insurance costs,” DeLong said of less-insured drivers on the road. “It only makes an already bad situation worse.”

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Matt Arco can be contacted at [email protected]. Follow him on Twitter at @MatthewArco.

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