Your auto insurance premium in New Jersey might cost more because you didn’t finish college. That’s the explosive claim at the heart of a new lawsuit that could reshape how insurers price policies across the state—and possibly the nation.
On November 18, 2025, the NAACP New Jersey State Conference filed suit alongside two Latino advocacy groups against the state’s Department of Banking and Insurance. Their accusation? The agency allows insurers to use your education level and job status as hidden proxies for race and income, creating a system that charges Black and Latino drivers more money for identical driving records.
If you’re paying higher premiums despite a clean driving history, this lawsuit might explain why. And the outcome could directly affect your wallet.
The Hidden Factor Driving Your Premium Up
Here’s what the complaint alleges happens behind the scenes at insurance companies: You provide your driving record, claim history, and vehicle information. Standard stuff. But insurers also ask about your education and employment status.
According to data cited in the lawsuit from Consumer Reports and ProPublica, companies like GEICO and Progressive drop premiums significantly as education levels increase—even when driving records stay identical.
Why does this matter for minority drivers?
- Systemic education gaps aren’t about driving ability. The complaint notes that Black and Latino drivers “are more likely than others to score poorly on education and employment scales” due to “systemic inequities that persist throughout our state and country”—not because they’re riskier on the road.
- Your diploma becomes a pricing tool. Two drivers with perfect records pay different amounts based on college completion, according to the research cited.
- Employment status follows the same pattern. Job type and stability factor into rates, creating additional disparities for communities facing higher unemployment rates.
The lawsuit states plainly: “Indeed, auto insurance carriers use education and employment as mere proxies for income and race.”
What New Jersey Regulators Are Accused of Doing Wrong
The New Jersey Department of Banking and Insurance (DOBI) oversees insurance companies operating in the state. The NAACP and Latino groups—including the Latino Action Network and Latino Coalition of New Jersey—argue DOBI has failed to stop discriminatory pricing practices.
According to the complaint filed in Superior Court of Mercer County, DOBI defended the current system by claiming correlation doesn’t prove proxy use. But the plaintiffs counter that “in discrimination analyses… intent is not always necessary—outcomes matter.”
Translation: Even if insurers don’t explicitly intend to discriminate by race, charging more based on factors that disproportionately affect minority communities creates discriminatory outcomes. And those outcomes violate the state constitution, the lawsuit contends.
DOBI hasn’t publicly responded to the specific allegations yet. The case is still in early stages.
How This Could Change Your Auto Insurance Bill
If the plaintiffs win, here’s what could happen:
| Potential Change | Impact on You |
|---|---|
| Ban on education-based pricing | Drivers without college degrees could see lower premiums |
| Ban on employment-based pricing | Job status stops affecting your rate |
| Complete rating system overhaul | New pricing factors focused on actual driving risk |
| Precedent for other states | Similar lawsuits could spread nationwide |
The lawsuit specifically asks a judge to declare that using income proxies violates New Jersey’s constitution, force DOBI to ban education and employment from rate calculations, and order a complete revision of the rating system to eliminate minority discrimination.
That’s a big ask. But if successful, minority drivers paying inflated premiums could see immediate relief.
The Data Behind the Discrimination Claims
Consumer Reports and ProPublica conducted research showing stark premium differences based solely on education. Same age, same car, same driving record—different diploma, different price.
The lawsuit doesn’t provide exact percentage differences, but the pattern holds across multiple major insurers. Progressive and GEICO are named specifically in the complaint for using these rating factors.
What makes this controversial from a civil rights perspective? Education levels correlate strongly with race in America due to historical and ongoing inequities. When insurers price based on education, they’re indirectly pricing based on factors shaped by systemic racism—even if that’s not the stated intent.
The NAACP argues that’s unconstitutional discrimination, regardless of insurance industry practices.
Why This Matters Beyond New Jersey
Only a handful of states currently ban the use of education and employment in auto insurance pricing. California, Hawaii, and Massachusetts have restrictions. Most states, including New Jersey, allow it.
If New Jersey courts side with the civil rights groups, expect domino effects:
- Other state regulators face pressure. Similar lawsuits could challenge rating practices in the 47 states without bans.
- Insurers nationwide might preemptively adjust. Rather than fight state-by-state legal battles, companies could voluntarily drop these factors.
- Federal attention increases. A state court victory could prompt congressional scrutiny of insurance pricing equity.
- Rating models get rebuilt from scratch. Removing education and employment means finding new actuarial factors—potentially reshaping the entire pricing approach.
The insurance industry has long defended these factors as actuarially sound, meaning they correlate with claim frequency and severity. But correlation isn’t the only legal standard. If it creates discriminatory outcomes, courts might rule it illegal regardless of statistical validity.
Should You Take Action Now?
This lawsuit won’t immediately change your premium. Court cases take months or years, and appeals could stretch timelines further.
But if you’re a New Jersey driver who suspects you’re paying more due to education or employment status, here’s what to do:
- Request your rate calculation. Ask your insurer which factors determine your premium.
- Shop around now. Some insurers weight education less heavily than others—compare quotes to find better rates.
- Monitor the case. Follow Insurance Journal for updates on the lawsuit’s progress.
- Consider advocacy groups. If you believe you’ve been unfairly charged, contact the NAACP or local Latino advocacy organizations about joining future legal efforts.
The outcome matters most for drivers without college degrees in minority communities. But premium changes could ripple across all demographics if insurers revise rating models statewide.
Frequently Asked Questions
Can my auto insurer really charge more based on my education level?
Yes, in most states including New Jersey. Insurers use education and employment as rating factors, arguing they correlate with claim risk. Only California, Hawaii, and Massachusetts ban this practice. The current lawsuit challenges New Jersey’s allowance of these factors as discriminatory.
How much more do drivers without college degrees pay?
The lawsuit cites Consumer Reports and ProPublica data showing “significant” premium drops as education increases, but exact percentages vary by insurer and individual profile. Two drivers with identical records can pay substantially different amounts based solely on diploma status.
What happens if the NAACP wins this lawsuit?
The lawsuit asks the court to ban education and employment from auto insurance pricing in New Jersey, force DOBI to revise the rating system to eliminate discrimination, and award legal fees. If successful, minority drivers and those without college degrees could see immediate premium reductions when policies renew.
Which insurance companies use education and employment in pricing?
GEICO and Progressive are specifically named in the complaint. However, most major auto insurers operating in New Jersey likely use these factors to some degree, as state regulations currently permit it. Contact your insurer directly to ask which factors determine your rate.
Bottom Line
Your driving record isn’t the only thing setting your New Jersey auto insurance premium. Education level and job status play roles too—and civil rights groups say that’s unconstitutional discrimination hidden behind actuarial math.
The lawsuit against DOBI could force the first major overhaul of insurance pricing equity in decades. Whether you’re directly affected or not, the case sets a precedent for how insurers can—and can’t—use demographic factors to determine what you pay.
Keep watching this case. The outcome won’t just change New Jersey law. It could reshape auto insurance pricing across America.