Auto insurance

Car insurance disparities between where you live and what you pay

LOUISVILLE, Ky. (WAVE) – The law states that a person in Kentucky is not allowed to drive unless they have car insurance.

How much does a driver pay and what are the factors involved? For the most part, it’s the driver’s age, driving record, insurance rating, and even credit rating.

But what if you take the same family with the same driving record, the same three cars, and the same coverage, but the only difference is where they live in Louisville?

That’s what convenience stores did to test the claim that residents of West Louisville pay significantly more for car insurance, more than double what residents in other parts of the city pay, especially compared to the easterners.

A licensed insurance agent gave us quotes using the three cars from the same family, currently valued at $16,000, $9,000 and $3,000, but changing their address to put them in various codes post offices around the city.

In the east end of the city, in zip codes like 40223 and 40299, the annual cost of insurance was just over $3,000. In 40217, the Schnitzelburg area, it was just over $4,000. On the south end, 40272, it was $4,482.

However, in the West End, in postcodes like 40210, 40211 and 40212, annual insurance costs ranged from $6,318 to $6,653. These ZIP codes have median household incomes ranging from $20,000 to $27,000 per year.

“It’s appalling, because we’re making up what they don’t want someone else to pay for,” Tayquan Spencer-Smith said.

He found out about it while shopping for insurance while living at 40212.

“Me and my financial adviser thought of something,” Spencer-Smith said. “Would it be different if we were to say I lived in East Louisville versus West Louisville? So we gave them an address for Anchorage, and they quoted $170 a month. So when I corrected my address and gave them my real home address, they upped it to $260.

We presented our findings to attorney Sam Aguiar, who had seen the same disparity in his clients before.

“Unfortunately, when I see these numbers and these insurance rates, I’m not surprised,” Aguiar said. “It’s redlining is what it is. When you see your poorest community in Louisville having to pay three times what someone in East Louisville would have to pay for insurance, there’s something fundamentally wrong with that. What’s even worse is that I hear from customers with 30-year-old clean driving records, no blemishes, who’ve never been in an accident, but who simply choose to live in a zip code where they are punished for it. It’s disgusting.

Insurance agent Denise Bentley suffered the same massive rate hike.

“When I came back from Louisville to Lexington, nothing had changed,” Bentley said. “Everything had stayed the same, except I moved into 40211, and the insurance company said it was because of the zip code you live in. Well, what does that have to do with my history with this company, my history as a driver?

Bentley said the rate disparities it found by neighborhood led to insurance fraud or non-insurance.

“You have limited resources and you spend them trying to be legal in Kentucky,” Bentley said. “But when you have a choice between feeding the kids or keeping your lights and gas bill on, sometimes you make those decisions. Not a month goes by as an agent where people don’t call me and say the payment won’t be made that month because it happened to me, or I have to go back to school .

Other studies show the same thing we found.

The Consumer Federation of America found that “predominantly African American neighborhoods pay 70% more, on average, for premiums than other areas” and “upper-middle-income people who live in black neighborhoods paid $194 % more for car insurance on average than upper middle income people living in white neighborhoods.

What is the reason for this? Is it a crime? When vehicle thefts and vehicle burglaries over the past three months were mapped in LMPD’s Crimetracker, there was a greater proliferation in the western part listed.

When the crime data for all of 2021 was sorted, a west side zip code like 40211 was found with more vehicle break-ins than a larger east side zip code like 40299. And 40211 had 230 motor vehicle theft. This is four times more than 40299.

A State Farm insurance agent, who would not go on camera, said the rate disparity had little to do with crime. He said it had to do with the frequency and severity of claims in an area.

He referred us to the public affairs specialist at State Farm, who referred us to the Insurance Information Institute.

“Locations could definitely be used as a factor, especially if it’s a high-crime neighborhood,” said Scott Holeman of the Insurance Information Institute. “If it’s known that crime is happening and there’s a lot of auto theft, that could impact rates.”

“These insurance companies, when you look at their finances, it’s disgusting,” Aguiar said. “They make so much money. What I’ve seen since I started practicing is that insurance companies are going to target certain members, certain demographic groups, within the community. And it’s still people of color. Still. Still a stereotype and an ongoing assumption.

“Race and religion are never used in insurance rates,” Holeman said. “It’s illegal, and no credible insurance agent or agency will use it. And if anyone thinks it’s true, they should file a complaint with their insurance company and contact the insurance department state and have the matter investigated.

“It doesn’t matter what your insurance score is,” Bentley said. “It doesn’t matter what your driving record is. It doesn’t matter how far you’ve gone. It’s just that the zip code makes you pay three to four times more than anyone else, and I still think that’s a way for them to get around redlining.

The results were presented to the Kentucky Department of Insurance, where they were asked if they agreed with the disparity.

They responded in an email, “This is not a Louisville-specific situation, as geographic location is a factor in determining auto insurance rates. For example, auto insurance rates are traditionally highest in Eastern Kentucky due to theft rates, lack of body shops, and road conditions.

WAVE – Louisville and southern Indiana NBC affiliate. Follow us on Twitter and Instagram @wave3news.(VAGUE)

Copyright 2022 WAVE. All rights reserved.