New N.J. bill aims to ban insurers from using certain rating factors
New Jersey may soon follow a trend of prohibiting insurers from using socioeconomic factors in pricing auto coverage.
New Jersey has begun to take steps to prohibit auto insurance companies from using certain factors, including a driver’s credit score, occupation, and education level, as factors to establish coverage rates.
The State Senate recently approved a bill that seeks to end the industry’s use of socioeconomic factors. Sponsors of the legislation say that the use of socioeconomic factors in determining coverage rates is unfair and discriminatory against low-income drivers.
Sponsors of the bill also note that the COVID-19 pandemic has reinforced the need to make a change, with millions of New Jersey residents facing hardship, inevitable changes to employment status, credit scores and homeownership which could trigger potential rate increases for many people during a time when personal finances are already suffering.
The bill, S-111, would prevent auto insurers from assigning an insured or prospective insured to a rating tier based on homeownership, marital status, educational level, credit score, employment status, or occupation.
Sponsors of the bill claim that current practices are absurd and that the legislation will hold insurers accountable and help ensure that vulnerable citizens are getting fair prices.
The bill was approved by the Senate, referred to the state Assembly, and is now under review by the Financial Institutions and Insurance Committee.
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