Car insurance costs sharply different between zip codes. RI lawmakers want to change that. (2024)

• Newport has the lowest rates

PROVIDENCE − In the smallest state in the country, should where you live change how much you pay for car insurance? What about your gender, your credit score or your level of education?

A bill introduced by Rep. Enrique Sanchez, D-Providence, would ban insurance companies from using a whole swath of personal data to set insurance rates, while a separate bill put forward by Rep. Arthur Corvese, D-North Providence, would ban only zip code discrimination.

"It's an ongoing problem for many people," Sanchez said in an interview.

People who live in Providence, in the state's urban core, where most of the new multi-family housing in the state is being built, face the highest cost of insuring a car, while Newport residents enjoy the lowest costs, according to a Providence Journal analysis of eight communities across the state.

Sanchez said it seems like part of the problem is that eliminating discrimination in car insurance rate setting is seen as a a zero-sum scenario: one person loses, with higher rates, if another person gains, with lower rates.

How that plays out in Rhode Island is people outside Providence, especially rural areas, think they will lose as industry officials say banning discrimination will make their auto insurance more expensive, while those in the urban center win when their rates are cheaper.

Sanchez said it isn't just zip codes and gender that his bill targets. It's disability too, as insurers charge more for vehicles that have mobility equipment, like vans that have lifts for wheelchairs.

"I think it's a lot of BS they use in determining rates and insurance premiums," Sanchez said. "They should charge based on driving record – that's the only thing that should be there, to hold people accountable."

What would the bill do?

In all, Sanchez's bill would ban the following factors from being used to set insurance rates:

• Education level
• Race
• Ethnicity
• Disability
• Occupation
• Income
• Credit
• Gender
• Zip code/adjacent zip code/census tract

While opponents called the bill radical, California, with a lower insurance cost than Rhode Island, already bans discrimination based on education, credit, occupation and gender – and goes a step further, banning discrimination based on age.

Both bills were held for further study in February.

Where is car insurance the cheapest, and most expensive, in Rhode Island?

Where you live matters when it comes to how much you pay for car insurance, according to an analysis by The Providence Journal, using quotes from Amica, although the zip code might not matter as much.

The Providence Journal used Amica's online quote calculator to generate estimates for nine locations, including two in different parts of Providence. For the quotes, the driver was a 30-year-old man driving an owned, four-door Honda Civic sedan with medium coverage. The only variables were the home address and zip code.

Newport had the lowest monthly premium, $163 a month, while Providence, for addresses in both the West End and off Blackstone Boulevard, had the highest, at $291 a month – a 53% difference.

Rates for the insurance quotes were set at:

• Bodily injury/uninsured bodily injury: $100,000 per person/$300,000 per accident
• Property damage: $50,000 per accident
• Medical payments: $5,000 per accident
• Deductible: $1,000

The full results, sorted by least expensive to most expensive, were:

What are take takeaways?

• The difference between rates in Newport and Providence is 53%
• Providence also had quotes significantly higher than anywhere else in the state ($91 a month more expensive than East Providence)
• Newport was $37 cheaper a month than East Providence's $200 quote

Rhode Island is the 5th-most-expensive state for car insurance

A report on national insurance prices by the website valuepenguin.com puts Rhode Island as the fifth most expensive state to buy car insurance, behind Michigan, Nevada, Delaware and Florida, with an average monthly premium of $220 a month for full coverage.

Adjust for liability-only insurance and Rhode Island and Florida are tied for fourth place at $101 per month.

Where is zip-code discrimination banned?

Two states have banned the use of zip codes for setting insurance rates, California and Michigan.

California is near the bottom of the list for car insurance premiums ($156/month for full coverage, $48 for liability only), landing at number 37 out of 51 (including Washington, D.C., but excluding Puerto Rico).

California also bans discrimination based on:

• Gender
• Age
• Credit history
• Education
• Occupation
• Employment status
• Homeownership vs renting

Michigan is by far the most expensive state to buy car insurance, with ValuePenguin putting the monthly cost of "full coverage" at $386 ($154 liability only), well above Rhode Island's $220. That's for several reasons, including a requirement that there is unlimited coverage for catastrophic injuries, which covers medical expenses for victims with life-changing injuries for the rest of their lives.

Insurance industry comes out against the bill

The Rhode Island affiliate of the American Civil Liberties Union submitted testimony in favor of Corvese's bill, citing an investigation into California's insurance rates in 2019 that found pricing based on discriminatory factors lead to marginalized groups paying more.

The Rhode Island Commission for Human Rights also submitted testimony in support of Corvese's bill, citing a 2015 study finding people living in predominately Black zip codes had higher insurance premiums than their white counterparts, and a 2017 ProPublica and Consumer Reports investigation that found the same.

During a hearing on the bill on Feb. 14, insurance agent Ernie Shaghalian and American Property Casualty Insurance Association lobbyist Frank O'Brien testified against the bill.

"We feel this would pick winners and losers," Shaghalian said.

O'Brien said he could not emphasis enough how "radical" it was, claiming that no other states do what the bill proposes and that it would increase rates.

O'Brien made no mention of California, which bans more criteria used to set insurance rates than Sanchez proposed.

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Reach reporter Wheeler Cowperthwaite atwcowperthwaite@providencejournal.comor follow him on Twitter@WheelerReporter.