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Tue Jan 29, 2013, 01:14 PM

American insurers charge reckless rich drivers less than safe poor drivers

"The Consumer Federation of America did a mystery shopper review of several auto insurers and found that drivers with at-fault accidents paid lower premiums than drivers with spotless records -- provided that the careless driver was rich and well-educated and the careful driver was a single renter without an advanced degree. "

Whole article at http://boingboing.net/2013/01/29/american-insurers-charge-reckl.html
Original article at
http://consumerist.com/2013/01/28/consumer-group-the-rich-may-pay-less-for-car-insurance-even-if-theyre-not-safe-drivers/

Another industry that needs to be better regulated, imo.

12 replies, 988 views

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Arrow 12 replies Author Time Post
Reply American insurers charge reckless rich drivers less than safe poor drivers (Original post)
FSogol Jan 2013 OP
leftyohiolib Jan 2013 #1
lynne Jan 2013 #2
FSogol Jan 2013 #3
REP Jan 2013 #5
LanternWaste Jan 2013 #6
lynne Jan 2013 #8
Recursion Jan 2013 #4
Egalitarian Thug Jan 2013 #7
HiPointDem Jan 2013 #9
Liberal_in_LA Jan 2013 #10
Xolodno Jan 2013 #11
Wednesdays Jan 2013 #12

Response to FSogol (Original post)

Tue Jan 29, 2013, 01:31 PM

1. wow what a shocker - i had filed bancruptcy back in '87 and that made me hi-risk to all my

insurers all my prems went up- they take risk into account and they define risk as being poor (although i didnt file b/c i was poor i was on advice from my lawyer regarding an accident)

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Response to FSogol (Original post)

Tue Jan 29, 2013, 01:32 PM

2. Sorry but that was set up to achieve those results -

- due to the variables they used. They compared a single woman, renter, with a 45+ day lapse in coverage to a married woman who owned her home that had been in an accident with $800. in property damage.

Rules and rates vary from state to state but I didn't see any state reference. The single woman lost a premium discount for not being a homeowner. She also received a premium surcharge for having a lapse in coverage.

The married woman received a discount for owning a home and was not surcharged for having a lapse in coverage. Her accident was not figured into the equation as $800. property damage is - in many states - not enough damage to trigger a premium surcharge. The trigger is normally $1,000. property damage. There is no reference to what type vehicle was insured. If the two women were given different vehicles, that could also make a difference in premium.

The only factor that points to income would be home ownership, which generates a premium reduction with some - but not all - companies.

Pretty much a sham comparison that was geared to get specific results. If they want to do this to prove that those with less pay more they need to compare rates for two women with very different incomes only and not throw in other factors that will impact the premium.

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Response to lynne (Reply #2)

Tue Jan 29, 2013, 01:47 PM

3. Wouldn't letting your coverage lapse be a clear indication of financial troubles? n/t

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Response to FSogol (Reply #3)

Tue Jan 29, 2013, 01:55 PM

5. Not necessarily, though it can be

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Response to FSogol (Reply #3)

Tue Jan 29, 2013, 01:58 PM

6. I imagine it would be a clear indication of many possible scenarios..

I imagine it would be a clear indication of many possible scenarios... financial problems being simply one of many.

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Response to FSogol (Reply #3)

Tue Jan 29, 2013, 02:25 PM

8. Not necessarily -

- could be the vehicle wasn't on the road for a while or they somehow missed the bill. Yes, that happens where people will miss a bill. People who have never had a policy and have no insurance history have the same situation where they pay a bit extra the first time. They end up with a "renewal discount" when the policy renews, reducing the premium.

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Response to FSogol (Original post)

Tue Jan 29, 2013, 01:49 PM

4. Sounds like they're worried about non-payment of premiums rather than accidents

It sucks, but I can see why they would do that. Until very recently poor people had to pay a lot more for cell phone service, too, for that exact reason.

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Response to FSogol (Original post)

Tue Jan 29, 2013, 02:06 PM

7. This entire industry needs to eliminated altogether.

 

They haven't done the job that they are allowed to exist to do for decades. It is time to eliminate them and take on the job for ourselves.

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Response to FSogol (Original post)

Tue Jan 29, 2013, 02:25 PM

9. kr

 

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Response to FSogol (Original post)

Tue Jan 29, 2013, 03:27 PM

10. I was renter most of my life, becoming homeowner opened my eyes. So many forms ask

"are you a homeowner" and offer discounts and perks for those who are. FOR NOT &%$# reason. it's a real divide.

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Response to FSogol (Original post)

Tue Jan 29, 2013, 04:30 PM

11. The system sucks monkey balls...

...and I know, I work in it.

A good driver is one factor. But, if you are poor then you are statistically more likely to live in an area more prone to theft and vandalism, other uninsured or underinsured drivers which counts against you. Never had a claim? Who cares, the stats say its more likely going to happen to you than the person who did have a claim for second time in a well to do area. The actuarial science is what drives premiums.

And yes, being a homeowner does give you a discount vs. a renter. If you are a renter chances are other renters live near you and in the event one of them is at fault for totaling you car, if they have insurance, it tends to be minimal amounts with limited recovery. If they don't...they have no assets to sue against. So yeah, you get a discount for being an owner because the insurance company can lessen the loss through salvage, lawsuits, etc.

Insurance companies segment like crazy on this, because they want to get the best risk, if not, enough premium to cover the overall losses. Just the way it is.

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Response to FSogol (Original post)

Tue Jan 29, 2013, 05:41 PM

12. K & R

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