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Several civil rights organizations filed a lawsuit Wednesday challenging New Jersey’s practice of allowing companies to use education and occupation to determine auto insurance rates — arguing the policy discriminates against Black, Hispanic and working-class drivers. The lawsuit is being led by Gov. Phil Murphy’s former chief counsel Parimal Garg and Alexander Shalom, a former ACLU attorney. Both now work for the law firm Lowenstein Sandler. The lawsuit alleges that some minorities and drivers with blue-collar occupations are being charged hundreds or thousands more for car insurance each year. “New Jersey enables carriers to skirt the prohibition of racial and income consideration by allowing carriers to consider a driver’s educational attainment and employment history,” the lawsuit says. “This is a distinction without a difference.” The lawsuit was filed by the NAACP, the Latino Action Network and the Latino Coalition of New Jersey against the state and the state Department of Bank and Insurance. The Murphy administration declined to comment. Representatives from the civil rights groups spoke outside the Lobby Club in Trenton, an exclusive venue where state lawmakers often gather to negotiate outside the Statehouse. “For far too long, insurers have used education and occupation to justify higher rates for Black, Brown and working-class drivers,” said Richard Smith, president of the NAACP New Jersey State Conference. “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.” The civil rights groups said the policy has little to do with how people drive. “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.” The use of education and occupation in setting auto insurance rates has long been controversial within New Jersey. The state Department of Banking and Insurance previously said eliminating the practice could prompt insurers to leave the market, making it harder for New Jersey residents to obtain coverage. In 2003, then-Gov. James McGreevey signed a package of auto insurance reforms aimed at attracting more carriers and lowering prices. By 2008, under McGreevey’s successor, Gov. Jon Corzine, the state held hearings on the issue. In April of that year, the Department of Banking released a report acknowledging disparities. “The fact that drivers who belong to a minority racial group or have nonprofessional occupations are, on average, less likely than others to receive the best rates from an insurer that uses occupation and education rating factors means that these factors do indeed have a differential effect on racial minority and lower-income drivers,” the report stated. Legislation introduced in 2006 to curb the practice failed to advance. The civil rights groups said the courts need to decide if the system is fair. “These plaintiffs did not decide to sue the government lightly,” said Shalom, a partner at Lowenstein Sandler and chair of the Lowenstein Center for the Public Interest. “After decades of meetings and appeals without meaningful change, the courts are now the only path to accountability. This case challenges a system that punishes people for who they are instead of how they drive.”
