Top advocacy groups for New Jersey’s communities of color filed a lawsuit on Wednesday alleging insurance companies unlawfully base auto insurance rates on factors like education and occupation to skirt laws that prohibit the use of protected factors like race or income.
The plaintiffs — the NAACP of New Jersey, the Latino Action Network, and the Latino Coalition of New Jersey — argue that education and employment are “mere proxies” of race and income, allowing insurance companies to charge higher rates to New Jerseyans of color. The suit, filed against the New Jersey Department of Banking and Insurance, calls on state officials to bar the use of education and job title in determining insurance rates.
“This is a distinction without a difference. … The fact that Black and Latino drivers are more likely than others to score poorly on education and employment scales has nothing to do with insurance, and everything to do with systemic inequities that persist throughout our state and country,” the lawsuit argues.
The lawsuit cites studies that found insurance carriers charge higher premiums to drivers of color with less formal education or lower-paying jobs, even if they have identical driving records to white drivers. The lawsuit argues the disparities constitute a violation of New Jersey’s protections against discrimination and equal protection.
“For far too long, insurers have used education and occupation to justify higher rates for Black, Brown and working-class drivers,” Richard Smith, president of the NAACP New Jersey State Conference, said in a release. “A person’s degree or job title should not determine what they pay to drive. These so-called risk factors are thinly veiled discrimination that keeps communities at a disadvantage.”
Alexander Shalom, Parimal Garg, and Matthew M. Wester of the Lowenstein Sandler law firm filed the suit in Superior Court in Mercer County.
“When insurers use your job title or education level to determine your premium, they are not measuring risk. They are measuring privilege,” said Maria Andrade, executive vice president of the Latino Action Network. “Allowing this practice tells our communities that the work we do or the opportunities we have been denied make us worth less. This lawsuit says enough.”
Advocates have long sought to bar the use of education and occupation history in auto insurance determinations. In 2020, the state Senate passed a bill that would have prohibited the consideration of education, occupation, homeownership status, marital status, or credit score in determining an insurance rate, but the Assembly did not move forward on the legislation. Versions of the bill have sat before the Legislature for some 20 years.
Tired of waiting, advocates are off to court.
“Across a wide range of studies, reports, and investigations, one central truth emerges: income proxies and other nondriving factors are being used in auto insurance scoring and underwriting in ways that unfairly burden Black and Latino drivers,” states the lawsuit. “Even when driving records are clean and accident risk is comparable, these communities consistently face higher premiums. This is not just a coincidence: it is the result of systemic inequities embedded in the financial and insurance systems, where historical discrimination like redlining and unequal access to education continue to shape insurance scores and underwriting decisions and, by extension, insurance costs.”
