A new bill aimed at ending discrimination in auto insurance has been reintroduced in the U.S. House of Representatives. Known as the Prohibit Auto Insurance Discrimination (PAID) Act, this legislation seeks to eliminate the use of non-driving-related factors, such as credit scores and occupation, when determining auto insurance premiums.
House Resolution 336 expands the list of prohibited factors beyond just credit scores and jobs. It will also include education level, employment status, gender, ZIP code, census tract, homeownership status, previous insurer, and prior insurance purchases. The bill specifically states that these factors cannot be used when insurers calculate premiums.
The bill, reintroduced as H.R. 3664 in May 2025, is sponsored by Representatives Rashida Tlaib from Michigan, Bonnie Watson Coleman from New Jersey, and Mark Takano from California. This effort builds on previous attempts to limit the influence of personal and socioeconomic factors in auto insurance underwriting.
Supporters of the PAID Act argue that these non-driving factors have little correlation with a person’s driving ability. They believe that using such criteria perpetuates disparities among different demographic groups, often leading to higher costs for lower-income drivers while benefiting wealthier policyholders. Lawmakers emphasize that auto insurance is a necessary expense for most Americans, as all states except New Hampshire and Virginia require drivers to have coverage.
If passed, the Federal Trade Commission (FTC) would enforce the new rules and could create additional regulations to support enforcement. Violations of the law would be classified as unfair or deceptive acts, allowing the FTC to impose penalties of at least $2,500 per violation. The agency would also have the authority to implement regulations to ensure compliance and prevent circumvention of the law.
Tlaib, representing Michigan’s 12th District, highlighted the high auto insurance costs faced by her constituents. She pointed out that education level and ZIP code are not reliable indicators of driving skills, stating, “Auto insurance discrimination continues to keep our residents in the cycle of poverty.”
Several states, including California, Hawaii, Massachusetts, and Michigan, have already implemented restrictions or limitations on the use of credit-based factors in setting auto insurance premiums. These state-level efforts have been motivated by concerns over fairness and accessibility in insurance pricing.
However, the insurance industry has expressed strong opposition to this legislation. Industry representatives argue that factors like credit scores and occupation are statistically significant indicators of risk. They warn that limiting these inputs could hinder insurers’ ability to accurately assess risk, potentially leading to premium increases for other consumer groups.
Research has shown that relying on credit scores can lead to significant disparities in insurance premiums. Drivers with lower credit ratings often face much higher premiums than those with better credit histories, even when their driving records are similar. Critics are calling for more transparency in the algorithms used by insurers and for regulatory frameworks to address potential unintended discrimination.
As the PAID Act moves forward, it will be closely watched by both supporters and opponents, with its potential impact on auto insurance pricing and fairness at the forefront of discussions.