WHO THINKS ELIGIBILITY FOR CAR INSURANCE/RATES SHOULD BE BASED SOLELY ON YOUR DRIVING RECORD?

I read a story that states that insurance companies are trying to base their rates for automobile insurance on your credit rating, age, and gender etc. Is that right/do you concur or disagree with the practice,
what do you think the right way is to determine insurance rates etc?

ARE THERE ANY CAR INSURANCE COMPANIES THAT DON’T USE A SOCIAL SECURITY # WHEN DETERMINING YOUR RATES?
CAR INSURANCE RATES – 5 TOP TIPS TO HELP YOU SAVE
WHEN GETTING CAR INSURANCE QUOTES, DO I HAVE TO LIST ANY VIOLATIONS THAT DO NOT APPEAR ON MY DRIVING RECORD?

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Comments (7)

#1 written by nbr660
about 2 years ago

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driving record
#2 written by oldsohm73
about 2 years ago

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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.”
#3 written by prayinfroggy
about 2 years ago

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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.
#4 written by bart4play
about 2 years ago

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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….
#5 written by CowboyBill
about 2 years ago

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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.
#6 written by mlc24_1980
about 2 years ago

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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.
#7 written by Spork
about 2 years ago

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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.