New bill aims to ban non-driving factors from insurance rate decisions

Representatives Bonnie Watson Coleman (D-NJ) and Rashida Tlaib (D-MI) have introduced a bill requiring that insurance companies use only driving records in determining car insurance rates and eligibility.

The Prohibit Auto Insurance Discrimination Act, or PAID Act, would end the use of income, education levels, and other factors unrelated to driving history and ability, preventing insurance companies from using these details to raise rates for individuals who otherwise have good driving records.

“Car insurance is absolutely necessary for most American families, so when companies raise rates for unfair, undisclosed, and unproven reasons, families are going to be hurt,” Congresswoman Watson Coleman said in a statement. “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 better than a system that is fundamentally unfair.”

Congresswoman Tlaib added: “I am proud to be partnering with Congresswoman Watson Coleman to bring an end to discriminatory non-driving factor practices in auto insurance with the PAID Act. Auto insurance rates should be determined by your driving record, not your credit score, gender, marital status, education, residence, or any other non-driving factor that has nothing to do with your safety on the roads.

“Drivers in Michigan’s 13th congressional district face some of the highest car insurance rates in the nation, and non-driving factors that serve as proxies for race and income and allow modern day redlining are a main culprit. The use of non-driving factors puts marginalized communities at a disadvantage and creates obstacles to economic opportunity for families. Recent efforts in states like Michigan to prohibit non-driving factors do not go far enough to stop these harmful practices — the PAID Act does.

“Residents across this country deserve equity in auto insurance. For some people, auto insurance cost make up more than 18 percent of their income. The affordable percentage of income for auto insurance nationally is two percent. Immediate action to bring relief to families is needed. I look forward to working to get the PAID Act passed with Rep. Waston-Coleman.”

The PAID Act would bar 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
• Prior purchase of insurance

It also would empower the Federal Trade Commission to enforce these prohibitions, and set the necessary regulations to do so.

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