Letter of Support – Maryland Consumer Rights Coalition

Most working families in Maryland need a car to reach rewarding job opportunities and the goods and services they need. But the high cost of car insurance often makes reliable transportation too expensive and is a leading reason that 15% of Maryland drivers don’t have even the minimum liability insurance required by state law.

Insurance companies use a slew of factors that are unrelated to a person’s driving record to set their auto insurance rate, such as credit score, education, marital status, and occupation. Someone with poor or moderate credit pays 40% more for auto insurance than they would if their credit were better, even though studies have shown that there is no relationship between credit and driving record. We believe that auto insurance costs should be based on how you drive, not who you are.

That is why MCRC is building a coalition to eliminate the use of such factors in pricing auto insurance and to help make insurance more affordable for low-income drivers. We are writing you today to invite you to join the Coalition for Affordable Auto Rates (CAAR) and to combat these unjust practices.

While employment holds the key to combatting poverty, residents of low-income city neighborhoods can reach just 54% of the region’s jobs within 90 minutes by public transportation. And yet, more than 80,000 families in Baltimore do not have a car. Without access to reliable transportation, many city residents struggle to get to good job opportunities. Conversely, research has also shown that access to a car can lift families out of poverty. In a 2010 study by ICF International Inc., 82% of people who participated in a low-income car-ownership program were able to leave public assistance, saving taxpayers $18.2 million.

Access to auto insurance on fair and affordable terms is critical for families across Maryland. Given the lack of adequate public transportation, access to a car provides both physical and economic mobility for low-income Marylanders. In fact, for many families, access to a car can mean the difference between living in poverty and earning a living wage. CAAR’s objective is to make auto insurance more affordable by requiring insurance companies to use only factors related to driving record to determine costs. California and Massachusetts already prohibit the use of some non-driving related factors in setting auto insurance rates-we’d like to make Maryland the third state to do so.

As part of CAAR, you will join a number of consumer, anti-poverty, workforce development, and public transportation allies in advocating for policies that will reduce the costs of auto insurance for working families. This year, we will focus on removing credit, education, occupation, and marital status from the factors insurance companies use to set rates in Maryland.

Please join CAAR and the movement to help Maryland families attain affordable auto insurance.

If you have any questions or comments about the issue, or CAAR’s goals and strategies, we would be happy to meet in person with your organization to share more information about this critical issue.

Best,

Marceline White

Executive Director

    We, the undersigned organizations, call on Maryland policymakers to prohibit the use of credit scores, education, marital status, and occupation in setting auto insurance rates.

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