Fast facts:
- Motor-vehicle insurance prices climbed steeply through 2024–2025, so any percentage-based differences now produce larger dollar gaps than a few years ago (BLS CPI motor-vehicle insurance).
- Most states still allow non-driving factors such as credit in auto pricing; drivers with poor credit often pay about 60%–100% more than those with excellent credit, and Black and Hispanic adults are less likely to report “good” or “excellent” credit—together implying higher expected premiums for minority drivers where credit is used (Pew; Federal Reserve).
- Regulators are detecting current-model disparities: Colorado’s 2024 SB21‑169 testing reported statistically significant disparate impacts in multiple carriers’ auto rating models, prompting remediation (Colorado Division of Insurance).
The injustices minorities face in America today extend into everyday financial services. Auto insurance is a clear example: premiums rose sharply in recent years, and widely allowed non-driving factors (credit, education, occupation) and territorial rating can magnify longstanding inequities. Because these inputs correlate with race and neighborhood conditions, Black and Latino consumers often face higher prices even with similar driving risk (Pew; NAIC Race and Insurance).
For example, did you know that auto insurers discriminate against residents who live in specific ZIP codes? One report shows auto insurers charge those living in predominantly Black neighborhoods 30% more than in white communities. And an analysis done in four states (Chicago, California, Texas, and Missouri) found significant gaps between the premiums charged to minority and non-minority neighborhoods. For instance, in Illinois, six auto insurers were found charging an average of 30% more for premiums for Black drivers.
These pricing patterns intersect with broader systemic inequities. When premiums are unaffordable, people can fall into a cycle of lapses, citations, and higher future premiums. At the same time, racial disparities in traffic enforcement mean Black and Latino drivers face greater exposure to moving violations that raise rates for several years, compounding costs beyond driving risk alone (multi‑state stop analysis; Bankrate; The Zebra).
In this article, we explore how these racial disparities in auto insurance rates come about, summarize the latest 2024–2025 evidence, and outline practical steps consumers can take.
How Your ZIP Code Impacts Your Rate
It’s not uncommon for insurance companies to use your ZIP code (or a broader “territory” built from ZIPs) to determine your premium. They do this by looking at factors like:
- The number of claims, crashes, and theft in the area (higher loss frequency/severity raises rates)
- Population and traffic density (more exposure increases crash likelihood)
- Environmental and roadway conditions (weather, street design, and high‑injury corridors affect risk)
- Local repair, medical, and legal costs (higher costs and more litigation drive premiums up)
- Emergency response and infrastructure quality (e.g., intersections with higher crash histories)
Because neighborhood risks and costs vary—and because territory is widely permitted in most states—where you live remains a significant driver of price (Insurance Information Institute). California is an outlier: regulators cap the weight of territory and require driving record, miles driven, and years licensed to carry the most weight (California regulation).
But why are insurance companies charging minorities significantly more than non-minorities? Historic investigations documented higher premiums in majority‑minority ZIP codes even at similar risk profiles (ProPublica; CFA). Today, the strongest current evidence points to structural drivers that disproportionately burden communities of color: most states still allow credit‑based insurance scores, which typically add about 60%–100% to premiums for drivers with poor credit, and Black and Hispanic adults are less likely to report strong credit—together producing higher expected premiums even with identical driving risk (Pew; Federal Reserve). Regulators are also finding disparate impacts embedded in current models: Colorado’s SB21‑169 testing surfaced statistically significant disparities in multiple carriers’ auto filings (Colorado DOI).
Let’s put this in perspective: The motor‑vehicle insurance CPI shows premiums climbed steeply through 2024–2025. That means any percentage differences from territory or non‑driving factors now translate into much larger dollar gaps than in earlier years.
Here are more facts from the report:
- Credit-based pricing remains widely allowed across states; only a small number broadly prohibit credit in auto rating (e.g., CA, HI, MA), and the District of Columbia enacted a prohibition in its market—policies intended to reduce disparate impacts (Pew; D.C. Law 24‑288).
- California limits the weight of territory by rule and requires driving-related factors to dominate pricing, unlike most states where territory remains a standard factor (California regulation; III).
- Colorado’s 2024 implementation of SB21‑169 identified statistically significant disparate impacts by protected‑class proxies in multiple carriers’ auto models, triggering remediation and heightened oversight (Colorado DOI).
- Because premiums increased markedly in 2024–2025, the absolute‑dollar burden of any disparity is larger than before (BLS CPI).
And this doesn’t afflict only the poorer minorities either. As overall premiums rise, the combination of territory and non‑driving factors like credit produces bigger dollar burdens across income levels for Black and Latino households—especially in states where credit is used and fewer adults report strong credit standing (Federal Reserve; Pew).
“These findings suggest a troubling pattern of high rates in African American communities regardless of driver history,” Tom Feltner, Director of Financial Services at the Consumer Federation of America, said on their website. Since then, regulators have increased scrutiny of unfair discrimination in models and external data (NAIC Race and Insurance; Colorado DOI).
How Traffic Tickets Factor Into Racial Disparities
What role do traffic tickets play in racial disparity? A substantial one. Nationally representative data show traffic stops are a primary point of contact between drivers and police, and large multi‑state analyses document persistent racial disparities in stop and search rates—including fewer stops of Black drivers after dark when race is less visible (the “veil of darkness” finding). These patterns elevate citation exposure for Black and Latino drivers, which in turn raises insurance costs for multiple years (most common reason; Nature study).
Black drivers are almost two times more likely to be pulled over than white drivers in many jurisdictions, and young Black men have even higher odds of being stopped. With elevated stop rates, minority drivers are more likely to receive a ticket for minor traffic infractions than white drivers. Recent statewide datasets echo these patterns, showing higher search rates but lower contraband “hit” rates for Black and Latino drivers—evidence of lower search thresholds (California RIPA program; veil‑of‑darkness analysis).
There are also stories of African Americans being pulled over for no reason and then threatened to be ticketed by the officer if they make an issue of it. This has become a significant concern because cops use traffic stops to find criminals (using search and seizures and warrant checks) instead of focusing on bad drivers.
Because of the injustices minority drivers face on the roadway, they’re more easily targeted by auto insurers looking to charge higher premium rates. One of the factors insurers look at when you apply for coverage is how many traffic violations you’ve had in the last three years. If you’re given a speeding ticket, it can lead to an average 13% increase in an auto insurance premium, while broader national analyses put typical increases around 15%–25% for a first offense, with surcharges often lasting 3–5 years (Bankrate; The Zebra). That’s because the insurer believes you’re at a higher risk of getting into an accident.
Unfortunately, if you’re an African American, then the odds of having been issued one or more citations are higher on average, according to multi‑state evidence—translating into higher expected premiums even before considering non‑driving factors (Nature study; California RIPA).
Can Red-Light and Speed Cameras Help?
If being prejudice is a human issue, wouldn’t it make sense to remove humans from the equation to eliminate racism? Well, that’s one reason some are pushing for more traffic cameras. It’s believed that by using red-light and speed cameras, it’s possible to reduce racial-inspired traffic stops, allowing police officers to focus more on serious crimes. Evidence shows cameras improve safety and compliance without discretionary stops—reducing opportunities for biased interactions when programs are designed with equity guardrails (IIHS; Urban Institute).
With the use of cameras, rather than minority drivers being targeted by police officers, all drivers would receive tickets in the mail when they run a red light or speed. Of course, if a driver happens to do this in front of an officer, it wouldn’t prevent them from being pulled over.
These cameras are already being used across the nation, although not widely. Roughly 153 jurisdictions in 17 states are currently using speed cameras (up from 111 in 2012). However, a third of them are in Maryland. And, unfortunately, the same adoption rate isn’t seen with red-light cameras. In 2012, there were 556 red-light cameras, and now there are only 340. Another 13 states have either partially or entirely outlawed speed cameras, and another eight states banned red-light cameras.
There are studies showing speed cameras help to reduce crashes near the cameras, and that red-light cameras decrease the amount of red-light running. And while it’s great that these cameras can improve the way people drive, there’s a more pressing reason to get them — reducing racism in American policing. You know this is an issue when you have a Black U.S. Senator (Tim Scott) admitting to being pulled over seven times annually at the beginning of his political career. In many cases, it was because he was driving a new car in the wrong neighborhood.
The only time racially-charged traffic stops are lower is at night, and that’s because it’s harder to see who’s driving. This is another reason why installing more traffic cameras can minimize the frequency of racist traffic stops. Jurisdictions that add cameras with equity provisions—such as California’s speed‑safety camera pilots authorized by AB 645—and that measure reductions in discretionary stops can expect fewer biased interactions while maintaining safety; Philadelphia’s program reported >90% drops in violations and notable injury‑crash declines on Roosevelt Boulevard (Philadelphia ASE; Nature veil‑of‑darkness).
How You Can Help Bridge the Gap
Traffic cameras can significantly help the injustice minorities face with police officers. But there are other ways citizens can seek help with reducing racial disparities in auto insurance pricing. Start locally: ask your city to pair equitable automated enforcement with street-design fixes and income‑based fine relief so safety improves without disproportionate financial harm (Vision Zero Network; Urban Institute).
One way is to support bills like the one written by U.S. Rep. Mark Takano, D-Calif. This bill requests the federal authorities to investigate racial disparities in auto insurance premiums. This would include the collection of ZIP-code-level claims from around the country to determine whether insurers are overcharging minority communities. And if they are, then determine whether the higher rates are justified (like having a higher risk of bigger payouts in those neighborhoods). Also back state and regulator actions that address unfair discrimination directly—Colorado’s SB21‑169 framework and the NAIC’s AI fairness guidance are active levers you can cite in comments and hearings (Colorado DOI; NAIC AI Model Bulletin). Where you live, support limits on non‑driving factors like credit (e.g., D.C.’s auto credit ban) (D.C. Law 24‑288).
The proposal received praise from civil rights groups and should receive the support of the public. Although citizens aren’t included in the voting process for bills, you can still support it by writing a letter to your legislators. Be sure to reference the bill name and number in your letter, along with why you support it. Getting family, friends, and others in your community to do the same can help push legislators to vote in your favor. In the meantime, use consumer protections: file a complaint with your state department of insurance if you suspect unfair pricing; ask your insurer for a clear explanation of rating factors; and appeal adverse decisions you believe stem from non‑driving factors. Advocacy groups like the Consumer Federation of America publish guides you can bring to regulators and legislators.
Another way to bridge the gap is to only do business with minority-owned insurance providers, or those that aim to eliminate racial biases. Also, reporting clear cases of discrimination against minorities can help build records of incidents that repeatedly occur for particular officers and departments. This way, when they are investigated, there’s mounting evidence of racist policing. If you’re shopping for coverage, consider safe‑driver and telematics programs that can reduce premiums based on actual driving—while noting equity considerations like smartphone access and data privacy; ask about alternatives if telematics is not feasible for your household (NAIC AI bulletin).
Even police reform, which is gaining momentum amid the Black Lives Matter movement, can potentially reduce racial profiling during traffic stops. In this case, police departments would be stripped of extra resources, which would, in turn, reduce their contact with the public. As a result, it can minimize the racial profiling of drivers that can lead to auto insurance hikes for minorities. As an added benefit, these police funds would be reallocated to support people and services that help marginalized communities (education, homelessness, mental health, etc.). Pairing reforms that reduce low‑level discretionary stops with equitable automated enforcement and fine relief can narrow disparities while maintaining safety (Driving Equality; Vision Zero Network).
The Bottom Line
Police discrimination against minorities is a real and persistent problem in traffic enforcement, and the financial impacts show up in auto insurance pricing. Current evidence indicates: premiums rose sharply through 2024–2025 (BLS); most states still allow non‑driving factors like credit that carry large price penalties and correlate with race (Pew; Federal Reserve); and at least one state regulator has found statistically significant disparate impacts in current auto models (Colorado DOI). Multi‑state research also documents racial disparities in stops and searches that can trigger multi‑year premium surcharges (Nature).
Closing these gaps requires policy change and consumer action: support fairness guardrails on rating models and non‑driving factors, adopt equitable automated enforcement to reduce biased stops, and use complaint and appeal rights to challenge unfair pricing. With coordinated advocacy and oversight, it’s possible to shrink disparities and improve affordability for communities of color.
