Auto Insurance Premiums Higher on the ‘Wrong Side’ of ZIP Code, Groups Say

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City News Service

SOUTH LOS ANGELES –  Some Los Angeles drivers pay higher auto insurance premiums because of where they live, despite a voter-approved initiative banning that as a criterion, the city attorney said today.

Rocky Delgadillo, the Rev. Norman Johnson of the Southern Christian Leadership Conference and representatives of consumer groups said a driver’s ZIP code can have a dramatic impact on how much they pay for auto insurance.

Delgadillo said some people in the Los Angeles area pay up to $500 more in annual insurance premiums than others regardless of their good driving records, and despite the approval of Proposition 103 — which bars premiums based primarily on a policyholder’s ZIP code.

Delgadillo blamed state regulations enacted by former California Insurance Commissioner Chuck Quackenbush, which allow insurers to base their auto premiums mostly on ZIP code, gender and marital status instead of driving record. That could change if the California Department of Insurance, now headed by John Garamendi, adopts a proposal by community and consumer groups and the city of Los Angeles to require insurers to base rates primarily on how policyholders drive, not where they live.

“Californians shouldn’t be penalized with higher auto insurance rates just because of their ZIP code,” Delgadillo said at Vermont Avenue and El Segundo Boulevard, the border between the 90044 (South Los Angeles) and 90247 (Gardena) ZIP codes.

Consumer groups say one leading insurer charges an annual premium of $930 for standard liability coverage for a female driver living on the 90247 side and having 22 years of driving experience and no accidents or traffic violations. They say if this same driver moved across the street into the 90044 ZIP code, she would pay $1,439 — 53 percent more.

Delgadillo said, “We call this zip-code profiling. We urge the Department of Insurance to end this
discriminatory practice so that auto insurance premiums are based on how well you drive, not where you live.”

Using the same driver described above, other disparities pointed out by groups such as the Foundation for Taxpayer & Consumer Rights include: — paying $590 for standard coverage in Thousand Oaks in Ventura County, but $1,530 if she lived west of downtown Los Angeles. — or $784 if she lived in Palos Verdes, as opposed to $1,280 if she lived in South Los Angeles.

But Pete Moraga of the Insurance Information Network, an insurance carrier advocacy group, said “geographic location is something that is taken into consideration with all insurances.” “People that live in high-risk areas obviously should pay more than people who live in low-risk areas. There’s no question about that,” he said.

But Consumers Union asked Garamendi last May to require auto insurers to base premiums primarily on three “mandatory” factors spelled out in Proposition 103 — a person’s driving record, miles driven and years of experience. The CU wants a regulation Quackenbush adopted in 1996
struck down. It allows insurers to give greater weight to ZIP code and other criteria.

Harvey Rosenfield is author of Proposition 103. “The voters (who passed Prop. 103) are looking to Insurance Commissioner Garamendi to correct this injustice, so that drivers who have a good safety record don’t end up paying higher premiums because of the neighborhood they live in,” he said.

Tonight, Garamendi will hold the latest in a series of statewide town hall meetings on the proposal at the Crenshaw Christian Center, 7901 S. Vermont Ave.

Consumer Watchdog
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