Problem solvers: The difference in car insurance where you live and what you pay

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

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

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 test claims that residents of west Louisville pay more for car insurance, double what people in other parts of the city pay, especially compared to people living on the east side.

A licensed insurance agent gave us quotes for driving three of the same family’s cars, which are currently $16,000, $9,000 and $3,000, but changing their addresses to put them in different zip codes around town.

In eastern zip codes like 40223 and 40299 the annual cost of insurance was over $3,000. In 40217, the Schnitzelburg area, it was over $4,000. At the southern end, 40272, it was $4,482.

However, in the west end, in zip codes like 40210, 40211 and 40212, annual insurance costs ranged from $6,318 to $6,653. Those zip codes have median household incomes ranging from $20,000 to $27,000 a year.

“It’s scary, because we’re doing something they don’t want to pay for,” Tayquan Spencer-Smith said.

He learned this while buying insurance while living in 40212.

“My financial advisor and I thought of something,” Spencer-Smith said. “Would it be different if we lived in east Louisville verses west Louisville?” So we gave them the Anchorage address, and they quoted $170 a month. So when I corrected my address and gave them my real home address, they added up to $260.”

We shared our findings with attorney Sam Aguiar, who had already seen this same difference through his clients.

“Unfortunately, when I see the insurance numbers and rates, I’m not surprised,” Aguiar said. “This redling is what it is. When you see your poor neighborhood in Louisville have to pay three times what someone in east Louisville has to pay for insurance, there’s something wrong with that. The worst thing is that I hear customers who have 30 years of good driving records, spotless, never had an accident, but they just choose to live in a zip code where they get punished. It’s sickening.”

Insurance agent Denise Bentley also took a big step forward.

“When I moved from Louisville to Lexington, nothing changed,” Bentley said. “Everything was the same, except I moved to 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 record with this company, my driving record. ?”

Bentley said the disparity he saw in his neighborhood led to insurance fraud or being uninsured.

“You have a small amount of money, and you’re using it to try to get legal in Kentucky,” Bentley said. But when you have a choice between feeding the kids, or saving your lights, gas money, sometimes you make that choice. Not a month goes by as a social worker without them calling me and saying that the payments can’t be made this month because this has happened, or I have to go back to school clothes. “

More studies reflect our findings.

The Consumer Federation of America finds that “African-American neighborhoods pay 70% more than other neighborhoods” and “middle-income Black neighborhoods pay 194% more for car insurance than the average. the upper classes are living in white areas.”

Why is this? Is it a crime? When car thefts and car break-ins in the last three months were recorded in LMPD’s Crimetracker, there was a significant increase in them in the west end.

When the crime data for all of 2021 was sorted, a western zip code like 40211 had more broken-in cars than an eastern zip code like 40299. And 40211 had 230 car thefts. That’s four times more than 40299.

A State Farm insurance agent, who would not go on camera, said the price difference is unrelated to crime. He also said that it has to do with the number and severity of claims in the area.

He referred us to State Farm’s Public Affairs Specialist, who referred us to the Insurance Information Institute.

“Location can be used as a factor, especially if there is a high crime rate in the area,” said Scott Holeman of the Insurance Information Institute. “If it is known that crime happens, and there is a lot of car theft, that can damage prices.

“These insurance companies, when you look at their money, it’s disgusting,” Aguiar said. He earns a lot of money. What I’ve seen, since I started doing it, is that insurance companies look out for other members, the community. And it’s always people of color. Always. All the time stereotypes and opinions are created. “

“Race and religion are not used in insurance rates,” Holeman said. “That’s illegal, and the trustee or the insurance agency doesn’t use that. And if someone believes that’s true, they should file a complaint with their insurance company and contact the state insurance department and get it checked out.”

“It doesn’t matter what your insurance is,” Bentley said. It doesn’t matter what your driving record is. It doesn’t matter how long you’ve been driving. It’s just that zip code forces you to pay three or four times more than everyone else, and I think that’s a way to get around it. “

The findings were presented to the Kentucky Department of Insurance, where they were asked if they were okay with the difference.

He responded in an email, “This is not specific to Louisville, as location plays an important role in calculating car insurance rates. For example, car insurance rates are often higher in eastern Kentucky due to theft, lack of shopping centers, and road conditions. .

WAVE – Louisville and Southern Indiana’s NBC affiliate. Follow us on Twitter & Instagram @wave3news.(WAVE)

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