LOUISVILLE, Ky. (WAVE) – The law says a person in Kentucky can’t drive unless they have auto insurance.
How much does a driver pay and what factors are involved? For most, it’s the driver’s age, driving record, insurance score and even credit score.
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 the troubleshooters did to verify the claim that people in the west end of Louisville pay a lot more for car insurance, more than double what people in other parts of the city pay, especially compared to the people living in the eastern end.
A licensed insurance agent gave us quotes by driving the same family’s three cars, which are currently worth $16,000, $9,000, and $3,000, but changed their address to put them in different zip codes in the city.
In the east end with 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. At the south end, 40272, it was $4482.
However, in the west end, in zip codes like 40210, 40211 and 40212, annual insurance costs range from $6,318 to $6,653. Median household incomes in these zip codes range from $20,000 to $27,000 per year.
“It’s terrifying because we come up with what they don’t want to charge anybody else,” Tyquan Spencer-Smith said.
He learned about it while shopping for insurance while living in 40212.
“My financial advisor and I thought about something,” Spencer-Smith said. “Would it be different if we said I lived in east Louisville verses west Louisville? So we gave them an Anchorage address and they offered $170 a month. So when I corrected my address and gave them my actual home address, they raised it to $260.
We cross-checked our findings with attorney Sam Aguiar, who had already seen the same discrepancy through his clients.
“Unfortunately, when I see these insurance numbers and rates, I’m not surprised,” Aguiar said. “The red line is what it is. When you see your poorest community in Louisville have to pay three times what someone in east Louisville would have to pay for insurance, there’s something wrong with that.” Even worse, I hear from clients with a 30 year clean driving record, spotless, never been in an accident, but simply choose to live in a zip code where they are penalized for it. This is disgusting.
The same huge rate hike happened to insurance agent Denise Bentley.
“When I came back from Louisville to Lexington, nothing had changed,” Bentley said. “Everything had stayed the same except I had moved to 40211 and the insurance company said it was because of the zip code you live in. Okay, what does that have to do with my history with this company, my history as a driver?”
Bentley said the rate differences she’s seen by neighborhood have led to insurance fraud or going uninsured.
“You have limited resources and you’re spending them to try to be legal in Kentucky,” Bentley said. “But when you have a choice between feeding your kids or leaving your lights on, paying the gas bill, sometimes you make those decisions. There isn’t a month as an agent that people don’t call me and say the payment won’t clear this month because this happened to me, or I have to go back to school clothes.
More studies show the same thing we found.
The Consumer Federation of America found that “predominantly African-American neighborhoods pay an average of 70% more in premiums than other areas” and “upper-middle-income individuals who live in black neighborhoods pay as much as 194% more for auto insurance on average of upper-middle-income people living in white neighborhoods.
What is the reason for this? Is it a crime? When vehicle thefts and vehicle break-ins over the past three months were mapped on LMPD’s Crimetracker, there was a more severe spread on the west end list.
When crime data for all of 2021 was sorted, a west side zip code like 40211 was found to have more vehicle break-ins than a larger east side zip code like 40299. And 40211 had 230 motor vehicle thefts. vehicles. This is four times more than 40299.
A State Farm insurance agent, who did not want to go on camera, said the rate difference has 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 State Farm’s public relations specialist, who referred us to the Insurance Information Institute.
“Locations can certainly be used as a factor, especially if it’s a high-crime neighborhood,” said Scott Holman of the Insurance Information Institute. “If it’s known that there’s crime going on and there’s a lot of car theft, that can affect the levels.”
“When you look at the finances of these insurance companies, it’s disgusting,” Aguiar said. “They make so much money. What I have seen since I started practicing is that insurance companies will target certain members, demographics, within the community. And they are always people of color. Always. Stereotypes and assumptions are always made.”
“Race and religion are never used in insurance rates,” Holleman said. “It is illegal and any reputable agent or insurance agency will not use it. And if anyone believes this to be true, they should file a complaint with their insurance company and contact the state insurance office and have it looked into.
“It doesn’t matter what your insurance score is,” Bentley said. “It doesn’t matter what your driving record is. It doesn’t matter the length you’ve driven. It’s just that the zip code forces you to pay three to four times more than anyone else and I still think it’s a way for them to get around the red line.
The findings were presented to the Kentucky Department of Insurance, where they were asked if they were okay with the discrepancy.
They responded in an email: “This is not a Louisville-specific situation as geographic location is a factor in calculating auto insurance rates. For example, car insurance rates are traditionally highest in eastern Kentucky due to theft rates, lack of repair shops and road conditions.
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