In California, a “disturbing” gap in what drivers pay for car insurance

A doctor who lives in ritzy Beverly Hills, California, and who has a clean driving record gets a nice financial perk — a generous discount on their car insurance rates. But in Watts, a lower-income neighborhood in Los Angeles just 20 miles south, a cashier who is equally prudent behind the wheel is likely to pay considerably more for auto coverage.

That practice — standard among car insurers — is now being challenged by regulators in the state. A first-of-its-kind investigation by California insurance officials recently found that auto insurers in the state offer discounts to white-collar professionals in wealthy neighborhoods, but typically deny those benefits to people of color in poorer areas.

California Department of Insurance Commissioner Ricardo Lara says that results in a “disturbing” gap in premium costs between such “affinity groups,” as insurance jargon describes such customer segments. His agency examined insurance policies gathered in May and found that some insurance companies offer discounts to doctors, lawyers, engineers and other well-paid professions.