Redlining Insurance companies punish you for where you live

If you don’t live in a swanky development or posh town in New Jersey, you may experience Redlining.

Location is one of the variables used to set rates. Insurers are also starting to use credit “scores”, occupation, marital status, and education level to set rates. Many consider these practices to be “unfair” and even racist.

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An interesting refutation to this is that the job of an insurance underwriter is to properly categorize a given risk as to the likelihood that the loss will occur. Any factor that causes a greater likelihood of loss should in theory, be charged a higher rate. This is a basic principle of insurance and must be followed for insurance companies or groups to operate properly, even for non-profit groups.

Thus, discrimination of potential insureds by legitimate factors is central to insurance. Therefore the only thing that can be considered legitimately “unfair” are practices that discriminate against a given group without actual factors that show that the group is a higher risk.

If you fail to met the criteria, have some accidents or moving violations you may be forced to the NJPAIP Car Insurance Plan.  It is where those considered high risk go to get insured.

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