In testimony before the New Jersey Senate Commerce Committee, the Consumer Federation of America urged the Committee to support S2248, which would ban the use of education, occupation, and credit score as rating factors in auto insurance underwriting. By banning insurers from pricing customers based on these socioeconomic factors, S2248 will make the insurance market fairer and more affordable for millions of New Jerseyans who struggle with the high cost of coverage.
New Jersey requires drivers to purchase and maintain auto insurance. The state therefore has a responsibility to make sure this product is affordable and that drivers do not experience unfair discrimination. However, under current law auto insurers charge dramatically different rates to drivers based on factors that reflect their socioeconomic status and not their driving behavior.
CFA’s 2023 report on New Jersey auto insurance premiums found that consumers with excellent credit and a perfect driving record paid an average annual premium of $660 for basic coverage. But if those same consumers instead had fair credit, their average premium increased to $1,087. And if they had poor credit, their average premium climbed even higher, to $1,663. New Jersey consumers with poor credit were paying on average 152% more just because of their credit information.