Safe drivers often charged more for car insurance!

[markg91359]

The problem with what many of you are suggesting is that you aren't seeing the larger picture. Its true you may not have been in an accident, not have gotten a ticket etc. However, for purposes of car insurance, you are placed in an "underwriting group". The reason your rates are going up is because the overall cost of providing insurance to people in your group has gone up. In other words, others with great driving records have been in accidents in the last year or two that they weren't anticipating. Of course, profit for the insurance company and salaries for its employees are a major drain on your premium dollars as well. No one should underestimate how much all insurance goes up because of health care costs. A major component of car insurance dollars are payments to health care providers. If these costs increase at the rate of 5 to 7 percent a year, over time, this alone is going to push up car insurance premiums.

The whole concept of insurance is simple: Its risk spreading or risk sharing. If we didn't require everyone in the same underwriting group to pay the same premium, it really wouldn't be insurance. One accident or one ticket could make insurance unaffordable for a driver who otherwise has a 25 year unblemished record.

Individuals can't be treated as such. Its the group they are in that determines rates. That's why your rates are going up.

[KittenSparkles]

My rates have not gone up for several years, but they have been the same for several years. I have been with USAA since I learned how to drive, so over 20 years. I've thought about changing, but I am concerned that if I get a low rate with another company, they may start raising it in a few years, so for now I have stuck with USAA.

The Kelly Blue book value of my car is $1,800 if I trade it in. I wonder if should drop the insurance that I've read most people drop on older cars - can't remember what that is called - comprehensive? collision?

[karen_in_nh_2012]

MarkG91359, the article in the OP focuses on lower-income SAFE drivers being charged more -- sometimes a LOT more -- than higher-income people in "professional" occupations who had had an accident within the past three years. Your comments didn't address that.

[markg91359]

MarkG91359, the article in the OP focuses on lower-income SAFE drivers being charged more -- sometimes a LOT more -- than higher-income people in "professional" occupations who had had an accident within the past three years. Your comments didn't address that.

I did read the article and I want to make a few points about it. Most of the article seems based on a rating comparison between two women. This seems to be the basis for the discrimination that is being alleged. Let's talk about the two women in the example:

1. The first woman (who is lower income with a high school education) is stated to have had no insurance for 45 days. Driving without insurance for any period longer than just a few days is considered a substantial risk factor by insurance. Where I live, a 30 day period of being uninsured will generally result in a rejection of coverage by all major insurance companies. Its very likely such a motorist may have to obtain "high risk insurance". In other words, the article glosses over an important risk factor in determining insurance rates.

2. The first woman is single rather than married. Marriage is considered an important rating criteria by insurance companies. Underwriters believe marriage leads to stability and stability leads to safer driving behavior. Being single, though, usually hurts men more than women when it comes to determining insurance premiums.

3. Insurance companies are profit-making institutions. They have nothing to gain by irrational discrimination against any group of people. The insurance market is competitive. In my state, I could purchase an automobile insurance policy from between 35 to 50 different companies if I wanted too. Principles of economics strongly suggest that in such a market insurance companies will try to keep premiums down to a level where they can compete with other companies.

4. Insurance companies are in a better position to determine what factors are more likely to result in bad driving (i.e., more accidents) and which factors can be ignored than people outside their industry can. I agree there is a public policy that ought to preclude discrimination based on things like race and religion. However, apart from those, companies should pretty much get a free hand in determining what else they want to build their rates around. For example, younger drivers are definitely a higher risk (as a group) than drivers in the 30-60 age category. Old drivers, are also more of a risk than middle-aged drivers are.

I don't work for an insurance company and I am no particular fan of them. However, I'm not comfortable second-guessing them and if we try to do so, I think its likely to lead to higher rates all around.