What Is 'Redlining'?
Redlining is known as a term associated with the practice where insurers charge higher premiums to residents in certain communities. The history of the word goes back to the custom of banks and insurance companies redrawing maps of their areas based on their assumption that certain communities are more likely to be riskier than others. The roots of redlining date back to the early days of lending, when banks would refuse to lend money to people living in certain communities due to the high levels of risk. Today, insurers use data about crashes and claims rates in different areas to set premiums. This can result in minorities and low-income residents being charged higher premiums than those in wealthier areas.
Effects In Auto Insurance
It is a common belief that insurers deny or charge higher premiums for insurance policies to people in certain areas. This can occur when an insurer determines that a particular community is too risky and can result in residents of those communities paying disproportionately high rates for auto insurance. The practice has been particularly harmful to communities of color, who are more likely to live in neighborhoods with low property values and high levels of crime. As a result, they often pay higher auto insurance premiums.
What You Can Do
Car insurance in Michigan can be a lot cheaper if you shop around and compare quotes from different providers. First, make sure that you always maintain your auto coverage. Second, make sure that the information for your policy is accurate. Finally, having an insurance agent, can make a big difference in what you wind up paying for your premiums. A good independent agent will shop for you and compare rates for two or three insurance companies and provide the best options for you.