Car insurance roulette: You could pay more because you’re a woman regardless of driving record

By Stephanie Zimmermann, Chicago Sun-Times

Looking for car insurance? Being a woman could add $370 a year to the quote you get even if you have a spotless record.

That’s according to a Chicago Sun-Times investigation that found you could be presented with an inflated price for automobile insurance for reasons that have nothing to do with your driving record.

Renting rather than owning a home, or working in an unskilled job could mean an extra $117 to $175 a year, the Sun-Times found. Living in the “wrong” ZIP code could mean an added $175.

For consumers unlucky to have a combination of factors that insurers see as negative, the result could be a price quote that’s $613 a year — 33 percent — higher than what their neighbors would be asked to pay.

And that was the case even when comparing people who have never had an accident and who own the same make and model of car, the Sun-Times investigation found.

Consumer advocates call the disparities unfair, especially given that auto insurance is required for anyone, including those driving to work or school.

“None of these things have anything to do with your driving history,” says Douglas Heller, an insurance expert with the Consumer Federation of America. To top it off, “Illinois does among the least when it comes to overseeing insurance practices.”

Insurance companies say the prices they quote are based on their historical data.

“The variables that we select are predictive of whether or not you’re going to be in an accident, regardless of income level or ethnicity,” says James Lynch, chief actuary for the Insurance Information Institute, an industry research group.

To determine which factors could get you a pricier quote for auto insurance, the Sun-Times obtained more than 300 online price quotes, using addresses in neighborhoods around Chicago, from seven insurance companies. We found that:

  • Gender discrimination is baked into pricing formulas of four of the seven insurers, which is legal in Illinois. The use of gender in determining car insurance pricing is specifically banned by seven states, including California, where a new anti-discrimination law took effect Jan. 1.
  • Drivers who don’t own their homes often are asked to pay higher prices for their car insurance. Four insurers quoted higher prices for drivers who rent, rather than own, a home — even when the renter lives on the same block as the homeowner.
  • Having the wrong job and less education can hurt you. Three insurers quoted higher prices to insure the car of a high school-educated retail worker compared to a college-educated teacher.
  • People living just a block apart — but in different ZIP codes — were quoted rates that varied by up to $175 a year in some cases.
  • And some insurers gave much lower price quotes to drivers on the North Side of Chicago than the South Side or the West Side even when presented with a potential insurance applicant with the exact same characteristics.

The differences were especially stark given that, for many Chicagoans, being able to drive is essential to upward economic mobility.

How we did the tests

The Sun-Times’ insurance price tests pull back the curtain on what’s historically been an opaque pricing system. Though insurers are required to file rate information with the Illinois Department of Insurance, the filings come in the form of hundreds of pages of algorithmic codes and numbers not easily understood by consumers.

By using the companies’ online price-quote tools, we were able to see how non-driving factors — such as gender, home ownership, occupation and location — can affect how much a consumer will pay.

In their ads, insurance companies practically beg consumers to take a few minutes to get an online quote. So the Sun-Times, running more than 300 tests, set out to investigate how much car insurance might cost for a driver in various parts of Chicago.

Each of the quotes sought was for a hypothetical single, 38-year-old driver who owns a 2012 Ford Taurus SE and has a perfect driving record. Our would-be insurance customer lives alone and drives about 10,000 miles a year.

Using house numbers no more than a block apart, as well as unique email addresses for each fictitious driver-applicant, we searched for price quotes, changing variables such as male versus female, homeowner versus renter, college-educated teacher versus high school-educated retail worker and homeowners living on either side of a ZIP code boundary.

We took the monthly price quotes and figured out what a year’s worth of coverage would cost.

All of the quotes covered bodily injury/property damage insurance, which is required to legally drive in Illinois. The quotes did not include collision coverage. Nor did they include comprehensive coverage for incidents like vandalism, car break-ins or theft — things that might be impacted by where you live.

Each of the price-quote websites includes a disclaimer that a driver’s credit history also will affect the final price. But even setting aside credit history, the Sun-Times found patterns of pricing differences by gender, home ownership, occupation and certain ZIP codes.

Price differences pile up

For example, Farmers Insurance quoted a female driver $327 to $370 more for yearly coverage than a male neighbor with otherwise the same characteristics and living on the same block in eight neighborhoods — ranging from North Center on the North Side to West Englewood on the South Side.

GEICO quoted a female driver between $83 and $98 extra per year in various neighborhoods around Chicago.

Progressive and Nationwide had a lower gender gap but still quoted a female driver about $60 to $64 more annually.

State Farm had no difference in prices for women and men. And Allstate bucked the gender trend, quoting a male driver about $18 more a year.

For a driver who rents her home, four insurers added between $60 and $175 a year to their price quotes — even when the renter lives on the same block as an otherwise-similar homeowner.

Farmers again had the biggest discrepancy here, with renters quoted between $152 and $175 more a year than homeowners. GEICO added between $73 and $91 for renters. For Progressive, it was $72 to $78 more.

Three companies penalized a blue-collar woman by quoting a high school-educated retail worker a higher price for car insurance than it did for a college-educated teacher, even though all of the quotes were for women who own their homes and drive the same type of car.

For example, Liberty Mutual added about $117 a year to the retail worker’s quote on the 6700 block of South Artesian Avenue in Marquette Park.

The prices kept going up as we changed more socioeconomic variables.

For instance, in the 2700 block of North Hamlin Avenue in Logan Square, Farmers quoted a female retail worker who rents her home $278 more a year than a female neighbor five houses down who is a teacher and owns her home.

In the same neighborhood, Farmers quoted a female retail worker who rents her home a whopping $613 more per year than a male teacher who owns his home.

Drivers caught on the unlucky side of a ZIP code boundary got higher price quotes, too.

In East Garfield Park on either side of Kedzie Avenue, for example, the Sun-Times tested addresses in the 3100 block of West Walnut Street, which is in the 60612 ZIP code, and the 3200 block of West Walnut Street, which is in 60624.

The 60612 ZIP code to the east is about 60% black, 20% white and 15% Hispanic, and 60624 to the west is about 94% black, 3% Hispanic and 2% white.

Price quotes came out higher in 60624: by $162 per year with GEICO, $158 with Farmers and $104 with Allstate — though the homes were just a block apart.

And the quotes often were higher on the South Side and West Side than on the North Side. For example, the GEICO tests had a female teacher and homeowner quoted $791 per year in Lakeview on the North Side but $1,097 in East Garfield Park on the West Side and $1,045 in Longwood and Brainerd on the South Side.

With Farmers, that same hypothetical driver was quoted $2,138 in Albany Park on the North Side and $2,380 in West Englewood and $2,247 in Marquette Park.

Some residents of neighborhoods where price quotes were higher expressed shock at the differences.

China Whigham, 20, says basing prices on non-driving factors is just wrong.

“Everybody should be charged equally, especially if you have no accidents, and you have a good driving record,” says Whigham, who lives and works on the West Side.

Fatima Ortiz agrees. Car insurance should be based “on how safe you drive,” says Ortiz, who lives in Chicago Lawn. “If I’m paying more, it’s not fair at all. I’m a safe driver.”

Heller, of the Consumer Federation of America, says that when insurance companies “slice and dice” their data, it has a cumulative effect on low-income consumers, who might find themselves on the short end of several non-driving factors.

“The fact that you’re a good driver becomes overwhelmed by several different proxies for your income,” Heller says.

Consumer advocates have pushed for years to remove non-driving factors from car insurance prices. Their argument: Car insurance is mandatory for drivers. People can’t legally choose to go without it, as they might with cable TV if the bills get too high.

And when non-driving variables like homeownership, occupation, education or credit history help determine premiums, the result is higher prices for consumers who’ve been economically damaged for years, says Brent Adams, senior vice president of policy and communication at the Woodstock Institute, a nonprofit organization focused on lending and finance for low-income people.

“It’s perpetuating inequities based on race and income that were formed by inequitable decisions decades ago,” Adams says. “It is kicking people while they’re down in a whole host of ways.

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