By Rachel DePompa | February 17, 2020
(InvestigateTV) – No accidents. No tickets. Higher insurance rates. An insurance insider says that’s the situation for some drivers and calls it rate discrimination.
Car insurance companies use a variety of factors to calculate the rate they charge drivers – and many of them have nothing to do with driving records.
“If you simply don’t have a four-year college degree and a high-paying job, you’re just not eligible for the preferred rate,” said Eric Poe. He’s been fighting for years to level the playing field, lobbying lawmakers at the state and federal levels to change how insurance companies set rates.
When insurance companies set rates for individuals, they use information that applicants offer – and they may use estimations or proxies based on that information to fill in other details to estimate risks.
“It’s a secret that nobody in my industry wants to divulge to the common person because they understand none of these proxies ever work in favor of people that have less income,” Poe said.
He said the estimated, or proxied, information can make a big difference for drivers and what they pay.
When it comes to income, he said insurance companies like wealthier customers because they are more likely to bring in a profit. For example, they may own more or higher value cars – needing more insurance coverage.
“Don’t think that the reason your rate is higher is because you’re a bad driver or this insurance company simply charges more than other insurance companies,” Poe said. “You can be blatantly discriminated against because the proxy likelihood of you not making a lot of money costs you 40% higher rates than the other driver who goes on the same website.”