February 24, 2021

Watson Coleman, Tlaib, Takano Introduce Legislation to End Discrimination in Automobile Insurance Rates

Today, Representatives Bonnie Watson Coleman (NJ-12), Rashida Tlaib (MI-13), and Mark Takano (CA-41) reintroduced a bill to ensure insurance companies use only driving-related factors in determining car insurance rates and eligibility. The Prohibit Auto Insurance Discrimination Act, or PAID Act (H.R. 1270), would end the use of income, credit score, education levels, and other factors unrelated to driving history and ability, preventing insurance companies from using these details to raise rates for low-income individuals, non-homeowners, and others who otherwise have good driving records.

“We have to start to acknowledge that we’ve allowed systems in this country to decimate the earnings and lives 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 higher rates for unfair, undisclosed, and unproven reasons,” said Congresswoman Watson Coleman. “Income proxies 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 higher rates. Working families deserve better than a system that is fundamentally unfair. I’m proud to work with my colleagues Reps. Tlaib and Takano on legislation like the PAID Act to level the playing field that been tilted against working families for far too long.”

“Auto insurance discrimination on the basis of non-driving factors has allowed auto insurers to reap benefits off the financial struggles of too many Americans—and the pandemic has exponentially exacerbated those financial struggles,” Rep. Tlaib said. “I am so grateful for Congresswoman Watson Coleman and Congressman Takano’s partnership and leadership on this issue. High auto insurance rates continue to keep our residents in the cycle of poverty. We are now one step closer to ending the predatory practice of auto insurers hiking rates and forcing folks to choose between paying their auto insurance, keeping a roof over their heads, or food on the table through no fault of their own.”


“It has been proven that using non-driving related factors to determine insurance rates leads to higher costs for people of color and low-income people, and it becomes an added burden for families that are already struggling to get by,” said Rep. Takano. “For millions of Americans, driving is a necessity — drivers shouldn’t be unfairly punished and charged higher insurance rates due to factors that have nothing to do with their driving history. It’s time to end these harmful and costly predatory practices and make the auto insurance market fairer for everyone.”

Ever more frequently, insurance companies use so-called income proxies to set automotive insurance rates, despite no evidence to indicate such factors identify risky drivers. Use of these proxies results in higher rates charged to lower-income drivers while more affluent drivers see savings, costing working families billions of dollars each year. The PAID Act would ban these practices by:

  • Barring the use of the following characteristics for calculating rates or deciding eligibility:
    • Education;
    • Occupation;
    • Employment status;
    • Home ownership status;
    • Credit score, consumer report;
    • Gender;
    • Zip code or adjacent zip codes;
    • Census tract;
    • Marital status;
    • Previous insurer, or
    • Prior purchase of insurance.
  • Empowering the Federal Trade Commission (FTC) to enforce these prohibitions, and set the necessary regulations to do so.


“Auto insurers shouldn’t be allowed to charge higher premiums just because someone hasn’t graduated from college or has a lower paying job or less than stellar credit score,” said Chuck Bell, Programs Director for Advocacy for Consumer Reports. “These socioeconomic factors and others like them have nothing to do with a person’s driving record and reinforce systemic racism. This bill will help ensure that auto insurance is priced fairly so drivers can afford the coverage they need.”

Every state except New Hampshire and Virginia requires drivers to maintain car insurance, making it essential for families that rely on a vehicle to get to work, pick up groceries or drop their children off at school. The PAID Act is cosponsored by Rep. Rashida Tlaib (MI-13), Rep. Mark Takano (CA-41), Rep. Bennie Thompson (MS-2), Rep. Jahana Hayes (CT-5), Rep. Mondaire Jones (NY-17), Rep. Alexandria Ocasio-Cortez (NY-14), Rep. Chuy Garcia (IL-4), Rep. Barbara Lee (CA-13), Rep. Eleanor Holmes Norton (DC-At Large), Rep. Sanford Bishop (GA-2) and Rep. Alcee Hastings (FL-20).

To see the bill in its entirety, click here.