Auto Insurance

Analysis of Consumer Expenditure Data on Auto Insurance Reveals Disparate Racial Impacts

African-Americans, Hispanics, Charged More than Caucasians

Washington, DC – A Consumer Federation of America analysis of 2016 data collected by the U.S. Department of Labor’s Consumer Expenditure Survey (CE) on auto insurance spending reveals disparate racial impacts.  These data suggest that African-Americans are charged average annual premiums of $1,317 per vehicle, and Hispanics are charged $829 per vehicle, while Caucasians are charged only $658 per vehicle.

The expenditure data do not take into account any risk-related factors or the amount of coverage purchased, but the data reveal that auto insurance purchases place a much greater financial burden on people of color than on whites.  All states except New Hampshire require drivers to have liability insurance coverage, and research shows that having a car greatly expands job opportunities as well as access to needed services.

“State governments that require drivers to purchase liability insurance should be very concerned that this insurance is usually costly, and often unaffordable, for people of color,” said Stephen Brobeck, CFA’s Executive Director.  “State insurance departments should address this issue through research and rate reform, and state legislatures should consider creating low-cost liability insurance options for lower-income drivers,” he added.

In the past, some states have addressed these cost disparities by limiting insurer use of socio-economic rating factors – such as education, occupation, and marital status – and by creating an affordable liability insurance product.

The U.S. Department of Labor’s Consumer Expenditure Survey provides the most reliable information on consumer spending on a wide range of goods and services.  The CFA analysis of the CE auto insurance data involved adjusting aggregate data for all households in these three racial and ethnic categories for car ownership and for the number of vehicles owned.  Even after the adjustments, the disparities revealed by this analysis likely understate the actual differences, because they did not take into consideration racial differences in the extent of coverage.  That is, whether the household purchased collision and comprehensive coverage or whether the liability coverage was for minimum limits or higher – and in the likelihood of being uninsured.  Because lower-income drivers are less likely to purchase collision and comprehensive coverage and are more likely to drive uninsured, given racial income differences, the two to one ratio in annual premiums between African Americans and Caucasians revealed by the CFA analysis is likely, in reality, to be even larger.

Contact: Ricky Eckman, 202-737-0766


The Consumer Federation of America is an association of more than 250 non-profit consumer groups that, since 1968, has sought to advance the consumer interest through research, education, and advocacy.