The bill also targets income proxies, which are sometimes used in the determination of auto rates when information about a person’s income is unavailable. (Credit: Rido/Adobe Stock)

A bill that would change the way auto insurance premiums are determined has been reintroduced in the U.S. House of Representatives. The Prohibit Auto Insurance Discrimination Act, or PAID Act, challenges what many argue are discriminatory considerations for determining a person’s auto insurance rates.

The bill was reintroduced by Representatives Rashida Tlaib, Bonnie Watson Coleman and Mark Takano. If passed, it would end the use of income, credit scores, education levels and other factors unrelated to a person’s driving history to set their premiums.

“My residents still pay some of the highest auto insurance rates in the nation. Your education level, zip code, credit score, home ownership status, job, and marital status do not determine your driving ability,” Congresswoman Tlaib of Michigan said in a release. “Yet auto insurance companies use these predatory and discriminatory practices when determining rates. Auto insurance discrimination continues to keep our residents in the cycle of poverty.”

The bill also targets income proxies, which are sometimes used in the determination of auto rates when information about a person’s income is unavailable. It argues that there is a lack of evidence that these kinds of factors indicate a driver is high-risk, which leaves lower-income drivers with higher insurance rates.

The PAID Act would ultimately ban the use of the following characteristics in determining rates or eligibility:

  • Education
  • Occupation
  • Employment status
  • Homeownership status
  • Credit score, consumer report
  • Gender
  • Zip code or adjacent zip codes
  • Census tract
  • Marital status
  • Previous insurer
  • Prior purchase of insurance

“We have to start to acknowledge that we’ve allowed systems in this country to drain the earnings of those least able to afford it and least able to speak up for themselves. Car insurance practices are part of the problem. Car insurance is a necessity for most American families, and many of them are being charged far higher rates for unfair, undisclosed, and unproven reasons,” Congresswoman Coleman shared in a release. “Factors like where you work or whether you have a college degree don’t weed out bad drivers — they just create a two-tier system where those who make less get charged more. Working families deserve better than a system that is fundamentally unfair. I’m proud to work with my colleagues Reps. Tlaib and Takano to introduce legislation like the PAID Act that levels a playing field that has been tilted against working families for far too long.”

The PAID Act (H.R.3664) can be viewed in its entirety here.

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