Consumer Reports: Can race affect your car insurance premium?

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Car insurance premiums should be color-blind, but a new investigation reveals drivers in some minority areas are paying significantly more. (WPVI)

Car insurance premiums should be color-blind, but a new investigation reveals drivers in some minority areas are paying significantly more.

This first-of-its-kind investigation found some of the biggest insurance companies charging premiums on average 30-percent higher in zip codes where most residents are minorities. That's compared to whiter neighborhood with similar accident costs.

Otis Nash is rated a good driver and pays $190 dollars a month for his auto insurance policy.

Christopher Day lives 14 miles away and is also rated a good driver. Day's policy has less coverage for comprehensive and collision but more coverage for liability, yet he pays $115 dollars a month for auto insurance with the same company.

And that's despite the fact Nash believes there's no real difference in terms of traffic when it comes to his neighborhood and others.

"I feel like it's pretty much like anywhere else. You get some traffic in the morning, but that's anywhere because you have people going to school and going to work," he said.

There is one difference between their Illinois neighborhoods. Nash's is mostly black and Day's is mostly white.

"We looked at 34 different insurers in Illinois, and 33 of them had, on average, a difference between minority and non-minority neighborhoods of higher than 10-percent," said Julia Angwin, Senior Reporter at ProPublica.

And this new investigation reveals price disparity based on ZIP codes is not just happening in Illinois.

"it certainly raises questions about what's going on nationally," said Angwin.

The Illinois Department of Insurance called the methodology "incomplete" and says it "does not tolerate discrimination." But some minority drivers are raising a red flag.

"Learning that our community might be targeted for higher insurance rates than the risk is a reason for people to be angry," said driver, Pernell Cox.

But the Insurance Information Institute, a trade group representing many insurers, disputes the findings, saying: "Insurance companies do not discriminate on the basis of race."

Meantime, Consumer Reports offers this very simple advice. If you haven't competitively shopped your auto insurance policy in a few years, do it now. It could save you a bundle, no matter your zip code.

To read the full investigation from Consumer Reports, CLICK HERE.

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