The short answer to the question as to whether race discrimination exists for mandatory car insurance is a definite yes, according to a study conducted by the Consumer Federation of America. Kansas City is no exception as, according to a chart in the study, the price of auto insurance is higher in ZIP codes with a greater than 75 percent black population than it is in ZIP codes with a less than 25 percent black population. The increased cost of automobile insurance exists despite the fact that racial discrimination in insurance policies is illegal in both Kansas and Missouri.
The same discrepancy adheres in virtually every urban area in the United States. The question arises, why is this happening?
Insurance companies can and do take into account a number of variables when it comes to the process of adjusting premiums, including:
- Gender (Females, even teens, are less likely to get into auto accidents than do male drivers.)
- Age (Teen boys are high-risk drivers.)
- Certain professions considered high risk
- Credit scores
- Model and make of car
- Education (people with a college degree are less likely to get into accidents)
- Driving records
The easy answer to this apparent discrimination is that African American drivers tend to live in a ZIP code with a higher than average crime rate and are more likely to have contact with the police. But the CFA study found this not to be a factor.
Also, African American drivers with a high to middle income still face higher auto insurance premiums than do white drivers of a similar income level. Driving records do not appear to be a factor either, as blacks with good records still pay more for car insurance than do whites with good driving records.
The disparity in the cost of auto insurance across the racial divide exists in the policies offered by the largest car insurance companies. None of the data suggests any external factors unrelated to race that would cause blacks on the average to pay more for auto insurance than do whites. The study did not suggest that the discrimination was conscious, however.
The results of the CFA study compel regulators in Missouri and Kansas, as well as across the country, to look into the matter further and to take corrective action. Carrying car insurance is mandatory in the two states for the privilege of operating an automobile. Any practice, no matter how unintentional, that makes the burden of being insured heavier on one race than on another is on its face unfair. Reforms might include setting a minimum affordable rate for cheap coverage and requiring insurance companies to take driving records into more account than the ZIP code the driver resides in.