Who thinks eligibility for car insurance/rates should be based solely on your driving record?
- 7 Comment
I read a story that says that insurance companies are trying to base their rates for car insurance on your credit rating, age, and gender etc. Is that right/do you agree or disagree with the practice,
what do you think the right way is to determine insurance rates etc?
7 Comments on this post
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bart4play said:
Yes—BUT they incorporate credit history because there is risk involved in receiving payments. College grad. is also a factor–WHY.. I don’t understand that. I’m sure there are other apparently "stupid" factors but ask their underwriters….
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0January 7th, 2010 at 12:58 pm -
nbr660 said:
driving record
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0 0January 7th, 2010 at 12:58 pm -
oldsohm73 said:
The bigger the liabiltiy the more money you are going to be spending. I don’t think it is right, but you can’t mess with "The Mighty Dollar Bill."
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0 0January 7th, 2010 at 12:58 pm -
prayinfroggy said:
I absolutely think it should be based on your driving record rather than age-old statistics or something foolish like your credit report. To this day, I have not figured out how having a bad credit score makes you more of a liability on the road.
Regardless, I doubt it will change any time soon, so I guess we need to suck it up. It’s not really like we could ban the car insurance companies…then we’d REALLY be screwed.
The lesson here? They do it because they can.
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0 0January 7th, 2010 at 12:58 pm -
CowboyBill said:
Dream on.
Credit ratings are used as an indicator of the type of person applying for coverage. Would YOU want to insure someone with $130,000.00 in credit card debt, two bankruptcies and a pending forclosure on their home? Someone like this, statistically, is a very bad risk. It is a fact that about 40% of all costs associated with insurance claims and operations are due to fruad and fraud prevention. The actual cost to indemnify losses is quite reasonable.Like or Dislike:
0 0January 7th, 2010 at 12:58 pm -
mlc24_1980 said:
I think the criteria should be driving record and age. At 18 years old, I was a terrible driver. But, after getting a speeding ticket and seeing how much my insurance was costing me, I toned down my driving habits. I don’t believe credit rating should have anything to do with it because your credit does not show what kind of driver you are, just what kind of spender you are. I have also heard that some insurance companies base your rate on your educational level. What does that have to do with your driving skills? Base the rates on what matters, not ways you figure out to get more money out of someone.
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0 0January 7th, 2010 at 12:58 pm -
Spork said:
There are two sides to this story. Charging people with low credit higher rates enables companies to charge people with better credit lower rates. Since there is a statistical relationship between poor credit and accidents, it makes sense to charge more.
There are companies that do not run credit. You can ask when you get a quote. Those companies are a bad deal to people with good credit, but a good deal to people with bad credit (or any of the other factors).
Actuaries, who figure out how to set up "risk pools" in insurance, have to strike a balance between polocies that enable companies to differentiate between different types of drivers and polocies that will drive to many people away. As a result, different companies set up different risk pools. This is why insurance rates differ so drastically from company to company. I once asked for several quotes and found out the my premium would be 400$ higher at some places. This is because of risk pooling.
In the end, I like existing policy because it means that good deals are out there. Under a pure driving record system, insurance rates would be similiar accross the board. This would make it eaiser to shop for insurance, but harder to find good deals.
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0 0January 7th, 2010 at 12:58 pm
