Black drivers in Georgia could pay 25% more for auto insurance, study finds
ATLANTA - A recent study by ValuePenguin reveals significant racial disparities in auto insurance premiums in Georgia, with Black-majority areas facing noticeably higher costs than their white-majority counterparts.
The study found that auto insurance premiums are 11.1% higher in Black-majority areas compared to the statewide average. In neighborhoods where Black residents make up at least 70% of the population, premiums are 25.1% higher.
For instance, drivers in predominantly Black areas pay an average of $4,423 annually for insurance, while the average premium in predominantly white areas is $3,342 — a difference of $1,081 or 32.4%.
Premium Disparities by Area and Vehicle
The disparities extend across various car models. Insurance for a Toyota RAV4 costs 33.9% more in predominantly Black areas compared to predominantly white areas, while a Tesla Model Y shows a 29.5% difference.
Among insurers, Geico had the largest disparity, with premiums 63.3% higher in predominantly Black areas than in predominantly white areas. Farm Bureau showed the smallest gap at 15.6%.
Explaining the Disparity
While insurers cannot legally use race as a factor in setting premiums, they often consider ZIP codes, which may correlate with racial demographics. Insurers cite higher claim rates and perceived risks in predominantly Black areas as reasons for the higher costs.
The study suggests that underlying socioeconomic factors and unconscious bias in risk calculation contribute to the disparities.
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Tips for Affordable Insurance
To combat high premiums, experts recommend shopping around for the best rates and asking about unadvertised discounts. Increasing deductibles can also lower costs.
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About the Study
ValuePenguin says it analyzed rates from the 10 largest insurers in Georgia, comparing costs for a hypothetical 30-year-old male driver with good credit and a clean record. Data was also matched with demographic information from the U.S. Census Bureau.