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Base insurance rates on driving

Tuesday, April 15, 2014
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Your insurance rates should be determined by how well you drive a car, not a golf ball.

But according to a recent survey by the New York Public Interest Research Group, car insurance companies are giving better insurance rates to executives and college grads than to those with nonprofessional jobs and high school diplomas.

The resulting difference in premiums was, in some cases, 15 to 25 percent and amounted to hundreds of dollars extra in premiums per year.

Because minorities and others from lower economic backgrounds tend not to have big jobs or fancy degrees, this practice opens the door to discrimination based on factors unrelated to driving ability.

A motorist's driving record, the number of miles driven each year, experience level and type of vehicle are certainly legitimate factors in setting insurance rates. Even such factors as gender and occupations that require a lot of driving can help determine the odds of one getting into an accident or running afoul of a radar gun.

But in what way can it be proven, all other factors being equal, that a bank executive or an accountant is necessarily a better driver than a cashier or a window washer? When in college do they teach you the extra-special driving skills you didn't learn in high school?

Because of the potential for discrimination, the state needs to step in and ensure that all New Yorkers are paying car insurance premiums based solely on the actual practice of driving.

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April 19, 2014
7:48 a.m.
+0 votes
fjcjr says...

The price paid for insurance is based on risk, not the risk that someone will be in an accident, but rather, the risk that an insurance company will have to pay. People with higher education and "big" jobs aren't necessarily better drivers, or less likely to be in an accident. However, they are less likely to file a claim for a loss, electing instead to "eat" the loss, reducing their loss experience, and hence their insurance rates. People with lower disposable income are not equally able to do this, so the insurance company pays more claims for them, and hence they pay higher insurance rates. This is the exact same reason insurance companies look at people's credit reports. With a higher score and lower indebtedness, statistically they will file fewer claims. At face value this appears to be unfair for treating people unequally, but it is merely based on who is a higher risk.


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