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  #1  
Old 03-19-2002, 12:16 PM
Sweet Willy Sweet Willy is offline
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Your insurance co. and government sanctioned descrimination

My son is nearing the legal age to drive an automobile. He is a very safe and experienced driver. In order for him to drive the state requires him to be insured. The insurance will be much much more than mine based upon his age and how long he has had a drivers license. The county we live in also will be a factor in determining how much we will pay. This does not seem fair at all especially considering that this is sanctioned by the state. Old people are more prone to poor vision and slow reaction but I don't think we discriminate against them without a good reason. (accident, ticket, etc.) Thoughts?
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  #2  
Old 03-19-2002, 01:51 PM
horhay_achoa horhay_achoa is offline
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I started a thread about this last summer. It was my first post even and it went to like 3 pages! I was very proud. Here it is:auto insurance age discrimination

I think you are totally right! I have never been in an accident or received a ticket, but my rates were through the roof because other people in my age group drive like idiots. It is not right. I am over 25 now, but I still think it is B.S. to charge people under 25 more for no good reason.

Everyone should start at the same rate, and then if you get in an accident or incur a ticket, your rate will go up based off of how much damage you did to the car, or how much faster than the speed limit you were going. If the statistics are correct, and more people under 25 get into accidents, then more people under 25 will still have higher rates.

I don' think where you live should matter either. If the statistics are correct, and certain cities are higher risk than others, then those cities will have more accidents, and therefore more people with higher rates...just like it is now, except people will get a chance to keep their rates low by driving safely.

It just doesn't make any sense to me. Age has NOTHING to do with driving ability.
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Old 03-19-2002, 02:05 PM
Sweet Willy Sweet Willy is offline
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OK, Sorry to repeat the thread. I did a search on "insurance" and didn't come across your thread. I'll check it out.
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  #4  
Old 03-19-2002, 02:24 PM
Demise Demise is offline
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What bothers me far more than rates based on age or sex are rates based on your credit history.

What the hell does your credit history have to do with how safely you drive?

Age based rates I can understand, if not necessarily agree with - the longer you've been driving, the safer you are at it, in theory. I am far more iffy on rates based on sex...but based on your credit history? What, if you don't have a credit card, you automatically suck at driving?
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  #5  
Old 03-19-2002, 02:32 PM
Sweet Willy Sweet Willy is offline
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The credit thing does stink too. Also they use your status as home owner or renter to help determine rates. I can understand it but it doesn't make it right, again considering that your state government forces you to do business in this manner.
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  #6  
Old 03-19-2002, 02:37 PM
Violet Violet is offline
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The whole insurance industry is complex to me, but they are a big money maker. I heard they survived the Great Depression. I imagine they have strong lobbyists, so that's why we can't understand a lot of the rules. Health insurance seems worse than car insurance. If young drivers cost most to insure, why are their health care premiums cheaper?
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  #7  
Old 03-19-2002, 03:15 PM
wring wring is offline
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Sigh. Old cogger alert.

Healt insurance rates are lower for younger people because (and I know this will surprise you), they generally have less things go wrong with them. As we age (or so says my doctor), stuff starts to break down, expensive stuff like your heart, kidneys etc.

We pay insurance companies to 'assume the risk' that something bad will happen. We pay a small amount (relatively) so that if something really big and bad happened, we wouldn't be sunk. THey, of course, having been paid by lots of people to assume the risk, are looking for ways so that they, too can make a living. So, if there's not a big chance that some one will get into an accident, then they've lot less risk.

However, it's not just amount of accidents, it's relative amounts of driving. The elderly would generally do significantly less driving per year than the young. Why? well, the youth are more likely to A. be working plus B. be going to school, plus C. have a relatively active social life where they'd be picking up lots of friends.
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Old 03-19-2002, 03:23 PM
Mr2001 Mr2001 is offline
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Violet: Young people are a lot less likely to go in for expensive procedures like heart surgery, hip replacement, etc.

I would have a lot less ill will toward auto insurance companies if they would base it on driving experience rather than age - who would you rather be in the car with, a 30 year old who just got his license this morning, or a 20 year old who's been driving for 5 years?

What confuses me even more is that some people say discrimination based on race is Not Okay, even though they have no problem with discrimination based on age. If the statistics show, without a doubt, that people with skin lighter than "5" on the Rembrandt scale are significantly more likely to make claims (which is what the insurance companies really care about), what's wrong with charging them a different rate? How is that different from charging a different rate because you're over 40, or under 20?
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  #9  
Old 03-19-2002, 03:37 PM
wring wring is offline
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Quote:
Originally posted by Mr2001
[What confuses me even more is that some people say discrimination based on race is Not Okay, even though they have no problem with discrimination based on age. If the statistics show, without a doubt, that people with skin lighter than "5" on the Rembrandt scale are significantly more likely to make claims (which is what the insurance companies really care about), what's wrong with charging them a different rate? How is that different from charging a different rate because you're over 40, or under 20?
WAG here - cause we can come up with a half baked theory why age would effect the rates (relative experience, miles driven, other risk taking behaviors), while it'd be difficult to come up with a theory of why the skin tone would have any effect on driving.

( I agree w/you re: the amount of experience)
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  #10  
Old 03-19-2002, 03:45 PM
SuaSponte SuaSponte is offline
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A few points:

1. Discrimination is legal, and always has been (even in state-mandated areas, such as auto insurance) if there is a legitimate (compelling, etc., depending on the type of insurance) reason for it.

2. It is axiomatic that insurance premiums are dependent upon the oods that the insured party will actually call on the insurer, as well as the potential amount of the claim. I don't think that anyone would argue that a trucking company that transports nuclear waste should have to pay more for (state-mandated) insurance than a trucking company transporting milk.

3. It is a fact that younger drivers, as a class, will have more accidents in a given year than older drivers.

4. There is a way around charging younger drivers higher premiums - make an individual assessment of each driver. However, the administrative costs of such a massive undertaking would serve to considerably drive up the costs of insurance for all drivers.

5. Mandating equal insurance premiums for younger and older drivers would serve to discriminate against older drivers. Currently, older driver's lower premiums is based on the fact that, as a class, they are less likely to have accidents and therefore call on the insurer to pay out. If premiums are equalized, premiums for older drivers would have to go up. Insurance companies would still want to get both enough money to pay off on any claims for the year, plus make their profit. I fail to see why forcing older drivers to pay more than their fair share of insurance premium costs in order to subsidize the premiums of younger drivers should not be considered discrimination against older drivers.

Sua
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  #11  
Old 03-19-2002, 03:48 PM
Sweet Willy Sweet Willy is offline
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If they are indeed just looking at odds and probabilty, and I think they are, it just seems alot like legal gambling.

More young drivers have accidents so we charge more for young drivers auto insurance.

More crimes are committed in black neighborhoods so we charge black people more for home owners insurance.

Will someone in the industy please tell us WTF is up.
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  #12  
Old 03-19-2002, 03:50 PM
D_Odds D_Odds is online now
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Quote:
Originally posted by Mr2001
I would have a lot less ill will toward auto insurance companies if they would base it on driving experience rather than age - who would you rather be in the car with, a 30 year old who just got his license this morning, or a 20 year old who's been driving for 5 years?
Speaking only on my observations of myself as I've aged, and now of observing my contemporaries, children and younger cousins as they've aged, I think that, in most cases, a 30 year old assesses risks better than a 20 year old. Therefore, a 30 year old with less experience on the road will assess the risks better and will (again, generally speaking) be more risk averse in his driving as a 20 y.o.

Before the gangbang starts, yes, I know of 20 year olds more experienced, more mature and more risk averse than 30 year olds. Insurance tends not to look at the individual as a person, only as a bunch of statistics. That is why it is not based on individual driving record; it is based on driver, age x, y accidents, z tickets, etc.
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Old 03-19-2002, 04:00 PM
Odesio Odesio is offline
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Re: Your insurance co. and government sanctioned descrimination

Quote:
Originally posted by Sweet Willy
My son is nearing the legal age to drive an automobile. He is a very safe and experienced driver.


He may be very safe when driving with an adult passenger in the vehicle but how experienced can he possibly be?

Quote:

In order for him to drive the state requires him to be insured. The insurance will be much much more than mine based upon his age and how long he has had a drivers license. The county we live in also will be a factor in determining how much we will pay. This does not seem fair at all especially considering that this is sanctioned by the state.


It seems completely fair to me even though I wasn't exactly happy about it. As a male under the age of 25 I know exactly what it is like to get insurance.

Quote:

Old people are more prone to poor vision and slow reaction but I don't think we discriminate against them without a good reason. (accident, ticket, etc.) Thoughts?
Are older people less prone to getting into accidents?

Marc
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  #14  
Old 03-19-2002, 04:43 PM
Captain Amazing Captain Amazing is offline
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Quote:
Originally posted by Demise
What the hell does your credit history have to do with how safely you drive?
You've never seen me on the run from my creditors.
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Old 03-19-2002, 04:54 PM
Sweet Willy Sweet Willy is offline
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He may be very safe when driving with an adult passenger in the vehicle but how experienced can he possibly be?
This is exactly the point. My son has a maternal grandfather and a step grandfather who are both in the Heavy equipment / construction business. Since a very young age he has been driving. He has demonstated his ability not only to safely drive an automobile but the ability to safely operate a bulldozer, rubber tire back hoe, track hoe, dump truck, not to mention motor cycles and ATVs. Exactly where do I get to have this considered by his insurance company?
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Old 03-19-2002, 05:04 PM
wring wring is offline
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Willy the issue isn't how safely you've seen your son drive, it's how safe will he drive w/o you in the vehicle.

My son was a very safe driver while I was in the car.

with his friends in the car, however, throwing gumdrops at passerby's apparently was a good thing to do.

Currently, he's car-less, 'cause he thought he was 'a perfectly safe driver'.
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Old 03-19-2002, 05:18 PM
Sweet Willy Sweet Willy is offline
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Willy the issue isn't how safely you've seen your son drive, it's how safe will he drive w/o you in the vehicle.
My son is no different than alot of kids raised in rural agricultural areas. I am not with him when he is working with his grandfather. No one is with him when he drives a dump truck all day moving earth from one side of the site to another. He is quite able to safely operate the vehicle amoungst all kinds of other construction vehicles roaming around with very little order to thier movements. I grew up "trucking tobacco", it was perfectly legal for a 13 year old to operate farm trucks engaged in agri business. This is really valuable experience that does contribute to a young persons ability to drive and holds no weight with insurance companies while statistics do. I know why, but that doesn't make it right.
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Old 03-19-2002, 05:24 PM
Odesio Odesio is offline
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Quote:
Originally posted by Sweet Willy

This is exactly the point. My son has a maternal grandfather and a step grandfather who are both in the Heavy equipment / construction business. Since a very young age he has been driving.


He drives bulldozers, back hoes, track hoes, dump trucks, motor cycles, and ATVs on public roads without any adult supervision?

Quote:

Exactly where do I get to have this considered by his insurance company?
I'm not exactly sure why they should consider it. Have you ever observed your teen driving on public roads without knowing an adult was observing? Have you ever seen how your teen drives with other teens in the car and no adult supervision?

You kid might be the best driver in the world. Unfortunately the insurance companies go by statistics and statistically he's not the safest bet. I know how frustrating that is. My sister had a brand new Mustang and she paid less in insurance then I did on my used Saturn.

Marc
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Old 03-19-2002, 05:35 PM
stofsky stofsky is offline
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Quote:
Originally posted by Sweet Willy

This is exactly the point. My son has a maternal grandfather and a step grandfather who are both in the Heavy equipment / construction business. Since a very young age he has been driving. He has demonstated his ability not only to safely drive an automobile but the ability to safely operate a bulldozer, rubber tire back hoe, track hoe, dump truck, not to mention motor cycles and ATVs. Exactly where do I get to have this considered by his insurance company?
And driving heavy equipment at 20-odd mph has exactly what to do with driving a '76 Camaro on the interstate? So he can steer and brake in limited interaction. But what can he do if he's running 75 in the right lane and the guy 20 feet in front of him brakes to dodge a deer?

I'll tell you, at 16, I'd have probably plowed up his ass. At 25, I'd have probably hit the guy in the left lane without knowing it. Now at 33, I think I'd have paid enough attention to the road around me to know if there were someone in the left lane, what the shoulder looks like ahead, and be able to assess if plowing up the other guy's ass is my best bet for survival.

Try to remember being 16 (or 18), and remember that you thought you were immortal; I did. Yes, your son is being stereotyped, but for good reason. I pay more attention to the road and the whole environment because I'm now afraid to die, or kill my wife or daughter. I didn't then, because at 16, nobody dies.
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Old 03-19-2002, 05:40 PM
SuaSponte SuaSponte is offline
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Quote:
Originally posted by Sweet Willy
[B]

My son is no different than alot of kids raised in rural agricultural areas. I am not with him when he is working with his grandfather. No one is with him when he drives a dump truck all day moving earth from one side of the site to another. He is quite able to safely operate the vehicle amoungst all kinds of other construction vehicles roaming around with very little order to thier movements. I grew up "trucking tobacco", it was perfectly legal for a 13 year old to operate farm trucks engaged in agri business. This is really valuable experience that does contribute to a young persons ability to drive.
I would submit, sir, that driving a truck or whathaveyou on a farm or construction site is pretty damn close to irrelevant to determining whether or not a kid is going to be a risk on the public roads. What your child has experience with is the physical tasks of controlling a vehicle. They ain't that hard to pick up.
The skills that young people lack (and your son likely does too, unless you have let him out on public roads) are such things as: anticipating the actions and reactions of other drivers; determining how much room he needs to come to a stop from 65 mph (unless he's really revving that truck across the construction site); determining how weather conditions affect stopping, turning, etc.
And, of course, either grandpa or people working for grandpa are around, so I doubt your son is getting loaded before getting behind the wheel of the dump truck.
Put your son against another 16 year old, and, at low speeds, I'd probably feel more comfortable with your son driving me around. But put him against a 30 year old who has never seen the inside of a dump truck or been on a construction site, but who instead has 130,000 miles experience driving on interstates, trunk roads and subdivisions, in rain, sleet, snow and fog, and the 30 year old wins hands down. And the 30 year old's rates are (and should be) lower.

Finally, Sweet Willy, remember there is no such thing as a free lunch. Would you object to have your insurances rates increased to pay for decreasing your son's rates?

Sua
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  #21  
Old 03-19-2002, 05:41 PM
D_Odds D_Odds is online now
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Quote:
Originally posted by Sweet Willy


My son is no different than alot of kids raised in rural agricultural areas. I am not with him when he is working with his grandfather. No one is with him when he drives a dump truck all day moving earth from one side of the site to another. He is quite able to safely operate the vehicle amoungst all kinds of other construction vehicles roaming around with very little order to thier movements. I grew up "trucking tobacco", it was perfectly legal for a 13 year old to operate farm trucks engaged in agri business. This is really valuable experience that does contribute to a young persons ability to drive and holds no weight with insurance companies while statistics do. I know why, but that doesn't make it right.
Even given all that, in the cold, harsh end, your son is nothing more than a statistic to be put into a certain bucket by the insurers. Each of those buckets is assigned a certain level of risk, and rates are based upon that. Are there 16 year olds who drive better than 30 year olds. No doubt. But an insurance company cannot objectively evaluate every driver. They can only look at huge amounts of statistics and make decisions based upon that. It's why my new car in Queens, NY costs more to insure than your son's car, despite a perfectly clean driving record. I could say I'm being discriminated against for living in NY; or I could say that I'm more likely to get into an accident in NY, and my car's more likely to be stolen in NY. Would you like your insurance equalized to cover my increased risks? Mind you, neither of these has happened, but my risks for these are higher.

They check credit because it costs more to follow up on late payers and non-payers; if you've a history of that, it's a mark against you. Certain insurers might not consider your business worth the potential hassle. Right, wrong? Who knows? Legal? Certainly.
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Old 03-19-2002, 05:44 PM
sailor sailor is offline
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>> More crimes are committed in black neighborhoods so we charge black people more for home owners insurance.

Let's not play dumb here, ok? Higher rates are charged in bad neigborhoods to everybody, black or white. What's the race of the owner got to do with it? It's the location of the house.

I am not going to get involved in this thread as i already said pretty much everything I had to say in the previous thread. I just want to remind everybody that only discrimination for very specific resons is prohibited and other than that we are all free to discriminate as much as we like and most companies do it all the time. Probably no two people onboard an airplane have pai the same fare. Students get discounts, old folks get discounts, there are multiple tariffs for everything, phone plans, etc. It would be impossible to regulate the price at which things are bought and sold and this is a very good thing. Old folks get discounts on many things and that means I have to pay more but that's the market. I like freedom to buy and sell for myself and for others. It is a good thing.
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Old 03-19-2002, 05:55 PM
december december is offline
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Quote:
Originally posted by D_Odds
They check credit because it costs more to follow up on late payers and non-payers; if you've a history of that, it's a mark against you. Certain insurers might not consider your business worth the potential hassle. Right, wrong? Who knows? Legal? Certainly.
In addition, bad credit is statistically associated with more auto accidents. Auto insurers want to reflect this association in their rates, even though they may not know why credit and driving are related.

I have been told that the California Insurance Department once did a study which showed that the poor had worse accident records. They did not release this study. It may be that bad credit is a proxy for being poor.
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Old 03-19-2002, 07:18 PM
David Simmons David Simmons is offline
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Re: Your insurance co. and government sanctioned descrimination

Quote:
Originally posted by Sweet Willy
My son is nearing the legal age to drive an automobile. He is a very safe and experienced driver. In order for him to drive the state requires him to be insured. The insurance will be much much more than mine based upon his age and how long he has had a drivers license. The county we live in also will be a factor in determining how much we will pay. This does not seem fair at all especially considering that this is sanctioned by the state. Old people are more prone to poor vision and slow reaction but I don't think we discriminate against them without a good reason. (accident, ticket, etc.) Thoughts?
Basing rates on individual driving performance is impossible with a first-time driver. There isn't any individual performance history to go on. Many insurance companies offer "safe driver" discounts after some history has been accumulated.

The county, or area, thing is controversial and in California at least, there are periodic attempts to do something about it. The latest try might have had some steam behind it but it seems to have disappeared from the news.
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Old 03-19-2002, 09:02 PM
Mr2001 Mr2001 is offline
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Quote:
Originally posted by D_Odds
Speaking only on my observations of myself as I've aged, and now of observing my contemporaries, children and younger cousins as they've aged, I think that, in most cases, a 30 year old assesses risks better than a 20 year old. Therefore, a 30 year old with less experience on the road will assess the risks better and will (again, generally speaking) be more risk averse in his driving as a 20 y.o.
But there's a lot more to being a safe driver than being wise. If you've never driven a car or driving simulator, you aren't going to have the reflex and reaction time necessary to handle emergencies like a car swerving into your lane.

General risk aversion will help prevent some dangerous situations ("should I slow down before this curve?"), but being familiar with how a car handles is far more important, IMO, because some situations are unavoidable. If you're planning to drive on snow or ice, there's no substitute for experience.

On a similar note... I can't find the link, but I saw a study recently where senior drivers were trained and tested on simulators to gauge their reaction ability, and even practice with regular video games improved their performance and made them feel more confident while driving. And who plays more video games than teenagers?
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Old 03-19-2002, 09:30 PM
Sweet Willy Sweet Willy is offline
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Basing rates on individual driving performance is impossible with a first-time driver. There isn't any individual performance history to go on. Many insurance companies offer "safe driver" discounts after some history has been accumulated.
How about a reasonable compromise. Insert a clause that states if after x years of safe driving insurance company will refund all assigned risk premiums.
This way the bad drivers get the extra bill and the safe drivers aren't unfairly charged due to circumstances beyond thier control.

OK. Feel free to shoot holes in this one.
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Old 03-19-2002, 10:04 PM
D_Odds D_Odds is online now
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Quote:
Originally posted by Sweet Willy
How about a reasonable compromise. Insert a clause that states if after x years of safe driving insurance company will refund all assigned risk premiums.
This way the bad drivers get the extra bill and the safe drivers aren't unfairly charged due to circumstances beyond thier control.

OK. Feel free to shoot holes in this one.
Easiest hole is purely a business one (and doesn't require me to speak about actuarial tables and risk factors and cash flow projections and reserves and so on). The insurance company already has your money. It's not about to give it back. At this point, put yourself in the insurance companies shoes, as they ask, "How does this benefit me? My competitors aren't doing it. If I do it, my competitors will also, and all I have done is throw away revenue."

Others can handle the insurance speak.
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Old 03-19-2002, 10:19 PM
Sweet Willy Sweet Willy is offline
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How does this benefit me? My competitors aren't doing it. If I do it, my competitors will also, and all I have done is throw away revenue."
I figure with all the regulations already in place, one more requiring something like this would be reasonable for all to comply with. Take the competitive element away and the revenue consideration in the issue disappears. Also D Odds , at risk of highjacking my own thread, do you know anything about how the state "re - insurance" facilities work? I understand it to be subsidized insurance for my insurance company. At any rate there have been charges for it on my insurance bill. Am I paying for my insurance companys' insurance too?
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Old 03-19-2002, 10:46 PM
D_Odds D_Odds is online now
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Quote:
Originally posted by Sweet Willy
I figure with all the regulations already in place, one more requiring something like this would be reasonable for all to comply with. Take the competitive element away and the revenue consideration in the issue disappears. Also D Odds , at risk of highjacking my own thread, do you know anything about how the state "re - insurance" facilities work? I understand it to be subsidized insurance for my insurance company. At any rate there have been charges for it on my insurance bill. Am I paying for my insurance companys' insurance too?
Heading back into my vast library of collected knowledge (one thin volume), I come up with not much more than a little hand-written note on reinsurers. In really broad, simpe, the government cannot afford to bail out insurers and insurers cannot afford not being able to pay premiums, so insurance companies insure their reserves, spreading the risk among several reinsurers. This way, in a September 11 case (or hurricane or tornado), MetLife alone isn't hit and put out of business (or put in a position where it is unable to pay claims). Instead, the risk is spread out over a wider net, reducing the risk of insurer default. Others can probably explain it a lot better, and I wouldn't be overly surprised (just mildly) if someone came in and said "D_Odds is just talking out the wrong end".

To get back to your thread, let's say government mandates this. Insurers must now reimburse good drivers. This is a direct bottom line hit on insurers, something no business readily accepts. Higher premiums for all then. And that's if they can get it past the insurance lobby to begin with. Plus it ignores any actuarial and statistical data that might not support this suggestions. Lastly, insurance does take your suggestion into effect - not refunding money, but by lowering the premiums for safe drivers. It's been far to long since I was in any risk category, but they might even do so for those in higher risk categories.
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Old 03-19-2002, 11:07 PM
Sweet Willy Sweet Willy is offline
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To get back to your thread, let's say government mandates this. Insurers must now reimburse good drivers. This is a direct bottom line hit on insurers, something no business readily accepts.
Yes I see your point. But it is also a direct hit on the consumers bottom line. I don't readily accept this either. Mind you not in the case of drivers with a bad history, that is justifiable, but in the case of drivers with no history it would seem sensible to me to at least refund any excess premium if the inexperienced driver happens to turn out to be a very low risk afterall. If I get a ticket or accident it is fine to charge me. I have identified myself as a risk by evidence. I am happy to pay that premium until I prove myself to be safe. The young drivers don't get that chance. And afterall, if young people are a greater risk, they will get into more accidents and get more tickets and the rates go up. If you are already at assigned risk level a speeding ticket could render you unable to afford insurance at all.
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Old 03-20-2002, 09:18 AM
D_Odds D_Odds is online now
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Quote:
Originally posted by Sweet Willy


Yes I see your point. But it is also a direct hit on the consumers bottom line. I don't readily accept this either. Mind you not in the case of drivers with a bad history, that is justifiable, but in the case of drivers with no history it would seem sensible to me to at least refund any excess premium if the inexperienced driver happens to turn out to be a very low risk afterall. If I get a ticket or accident it is fine to charge me. I have identified myself as a risk by evidence. I am happy to pay that premium until I prove myself to be safe. The young drivers don't get that chance. And afterall, if young people are a greater risk, they will get into more accidents and get more tickets and the rates go up. If you are already at assigned risk level a speeding ticket could render you unable to afford insurance at all.
I can't speak for your insurance, but mine does reward good driving. My rates were lowered from their initial levels after I had gone a period without accidents. Essentially, I was paying a premium, despite a clean record, as an adult. I don't know if the same works in the under-25 category, or even it is nationwide.
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  #32  
Old 03-20-2002, 09:39 AM
C K Dexter Haven C K Dexter Haven is offline
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First off, it is not illegal to discriminate based on age (in the context we are talking about.) It is illegal in many circumstances (usually employment related) to discriminate based on age over 40, but you can discriminate all you want in terms of teenagers, under 25 or whatever.

Then, there are permitted exceptions to the discrimination rules that are based on gender, race, etc. For example, if you are casting for the lead in a TV biography of Marilyn Monroe, you can refuse to interview black male actors. This is "racial discrimination" but it is perfectly legal. There are a few other situations where the anti-discrimination laws allow exceptions.

Now, in terms of insurance, insurance is based on risk. You would not expect a 22 year old to pay the same amount for life insurance (one year term) as you would a 93 year old. If an insurance company did charge some sort of average flat rates like that, the young people would not buy life insurance (it would be too expensive) and the premium would skyrocket, and the insurance company that winds up only insuring the over-70 crowd is not going to be profitable. Nor even viable.

The same is true with car insurance. Statistics show that the under 25 crowd has more claims than the over 25 group, that young males have more claims than young females. These rates are also altered by whether the person is married or single, and most insurance companies give a "good student discount" if the young person is full-time in school with a B-average or above.

Imagine an insurance company that charged a single rate for everyone, regardless of risk factor. YOUR rates (as an over-25 year old) would go up, and the rates for the 20-year olds would go down. Large numbers of the older population would therefore go to a competitor insurance company that offers age-related rates.

In short: the total amount of claims that an insurance company expects in a year is fairly predictable based on statistics. The insurance company needs to collect enough premium to cover those claims. They can do that by assigning higher premium to the higher risk groups (as they do now), or they can do that by assigning a flat premium (as you seem to call for). The flat premium problem is that everyone else's costs will go up dramatically to account for the higher claims of the under-25s.
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  #33  
Old 03-20-2002, 10:41 AM
sghoul sghoul is offline
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Sweet,

You may want to look at other insurance companies. I know when I was at that age, my folks insurance company lowered my rate because they had good records. The company felt that I would be less risk, since I was under the influence of good drivers. On top of that, my rates were dropped for taking drivers Ed and getting good grades in school (turned my report cards in regualrly).

I lived in a fairly small town...very agricultural. I had friends who had lower rates for the very reason you think you son should. they had been driving on the farm for years. Mind you, my rates were still higher than my folks, but they had been driving for almost 30 years. So that makes sense.
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  #34  
Old 03-20-2002, 11:34 AM
horhay_achoa horhay_achoa is offline
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Quote:
Originally posted by C K Dexter Haven
Now, in terms of insurance, insurance is based on risk. You would not expect a 22 year old to pay the same amount for life insurance (one year term) as you would a 93 year old.
Yes, but everyone on earth dies at some point. Therefore, the older you are the closer you are to dying. Period. Age is directly related to how many more years you can expect to live. Age is not directly related to how well you can drive.



Quote:
Imagine an insurance company that charged a single rate for everyone, regardless of risk factor. YOUR rates (as an over-25 year old) would go up, and the rates for the 20-year olds would go down. Large numbers of the older population would therefore go to a competitor insurance company that offers age-related rates.
Yes. Everyone's rates would go up a little bit, but it seems more fair to give people a chance to determine their own rate by driving safely. It might even lead to teenagers taking less risks behind the wheel because they want to keep their rates low.

A few more points:
1) It is fine to use type of car as a factor in determining rates, because the type of car is directly related to how much the parts will cost and how many safety features the car has. However, age and location are not directly related to how well some one can drive.

2)Why did the Insurance CO's decide that 25 was the safe age? If drivers under 25 have more claims than drivers over 25 then statistically drivers under 60 must have more claims than drivers over 60. So why not charge more for everyone under 60 and make even more money than they do now? The reason is that people under 25 do not have the political or economic power to really do anything about it, but older people might.


3)Assuming that almost all drivers will pass through every risk group, insurers could calculate the total risk of a driver through out their entire driving career. The rates could be based off of that risk factor. Then every one would start at the same rate.
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  #35  
Old 03-20-2002, 11:44 AM
SuaSponte SuaSponte is offline
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Quote:
Originally posted by Sweet Willy

How about a reasonable compromise. Insert a clause that states if after x years of safe driving insurance company will refund all assigned risk premiums.
This way the bad drivers get the extra bill and the safe drivers aren't unfairly charged due to circumstances beyond thier control.
Sweet Willy, you are operating under the fallacy that there is an infinite amount of insurance money out there. What you have to realize is that any plan that results in lower premiums for young drivers, either directly or through reimbursement results in a net loss of revenue for insurance companies, that must be made up somehow.

To massively simplify, the equation of insurance goes like this:

[(high premium)(young drivers) + (low premium)(older drivers)] = cost of claims + administrative costs + profit

The two sides of the equation must be equal.

Individual assessment of young drivers would push up administrative costs on the right side of the equation. To re-balance the equation, more money would need to be collected as premiums.

Equalization of young drivers' and older drivers' premiums across the board would still have to result in the same amount of revenue going to the insurance company, in order to keep the equation equal. Thus, older drivers' premiums would have to go up.

As for your reimbursement "compromise", reimbursement of safe young drivers would be an additional expense to the insurance company, on the right side of the equation. In order to re-balance the equation, premiums would have to go up.

Anyway you cut it, reducing younger drivers' premiums, either directly or through reimbursement, is a loss of revenue (or increased administrative cost) that has to be made up somewhere. And where that would be would be in an increase in older drivers' premiums. Why should older drivers subsidize young drivers' insurance (any more than they already do - which they do)?

Sua
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  #36  
Old 03-20-2002, 12:01 PM
SuaSponte SuaSponte is offline
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Quote:
Originally posted by horhay_achoa
1) It is fine to use type of car as a factor in determining rates, because the type of car is directly related to how much the parts will cost and how many safety features the car has. However, age and location are not directly related to how well some one can drive.
Yes, they are.
Age - a young driver is more likely to make a claim. Simple fact. There are a number of scientific bases for this, from psychological to neurological.
Location - location will affect both accident-related claims and car theft/damage related claims. A driver living in West Nowhere, Nevada is less likely to get into accidents because there are less cars on the rode with which the driver can "interact". Also, as more accidents out there will be one-car accidents, the claim for accidents that occur will be on average smaller.
As for car theft/damage claims, a car in East New York, Brooklyn is more likely to be stolen or vandalized then the car in West Nowhere.

Quote:
2)Why did the Insurance CO's decide that 25 was the safe age? If drivers under 25 have more claims than drivers over 25 then statistically drivers under 60 must have more claims than drivers over 60. So why not charge more for everyone under 60 and make even more money than they do now? The reason is that people under 25 do not have the political or economic power to really do anything about it, but older people might.
I do not accept without evidence that all drivers over 25 are charged the same rates. Second, your statistical assertion is likely inaccurate.

Quote:
3)Assuming that almost all drivers will pass through every risk group, insurers could calculate the total risk of a driver through out their entire driving career. The rates could be based off of that risk factor. Then every one would start at the same rate.
That assumes huge amounts of things that simply aren't true. First, that assumes that a driver (a) keeps driving and buying insurance his/her entire life. Taking myself as an example, I haven't had car insurance (or a car) in 8 years, since I moved to NYC. Under your plan, I would have represented a loss to the insurance company. Second, that assumes that a driver won't die, either in a car-related or non-car related accident (or murder or disease). Every driver who dies before the norm would represent a loss to insurance company. Third, it assumes that the driver would stay with the same insurance company his/her whole driving life. If a person switches insurers after turning 25, the original insurance company would again suffer a loss.

And how would all of these losses be made up? By higher insurance premiums.

Anyway, people's insurance premiums are already equal. Under the same circumstances, all people will pay the same amount of car insurance premiums over the course of their life. They all simply pay a higher proportion of it when they are younger, and a lower proportion as they age.

Sua
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  #37  
Old 03-20-2002, 12:19 PM
sailor sailor is offline
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>> there are less cars on the rode

Sua, that has to be the most subliminable thing I have seen in some time. I have *never* found any cars cars on my rode (thank goodness) but even if I did, in metric countries we measure cars in terms of "fewer" rather than "less".

As to the substance of your post, you are right on. Of course.
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  #38  
Old 03-20-2002, 06:44 PM
Sweet Willy Sweet Willy is offline
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OK. This has been fun and educational. No matter the reason, I will have to pay the premium. Which, BTW, is going to be $1470.00 per year compared to my $268.00 per year. So be it. Hint for next thread; My son is 15 and the federal and state governmant take taxes from his pay check. Representation anyone?
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  #39  
Old 03-20-2002, 06:45 PM
december december is offline
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Quote:
Originally posted by Sweet Willy

How about a reasonable compromise. Insert a clause that states if after x years of safe driving insurance company will refund all assigned risk premiums.
This way the bad drivers get the extra bill and the safe drivers aren't unfairly charged due to circumstances beyond thier control.

OK. Feel free to shoot holes in this one.
Something like this is used for workers compensation insurance. It's called "retrospective rating." The insured business pays a premium; after the policy expires, the insured may get a refund or pay additional premium depending on how costly the clainms have been for that policy. This approach works best for a large company which normally has several claims per year.

One weakness in Sweet Willy's proposal is that there are lots and lots of competing insurance companies. Which one should pay the refund?

I second the suggestion of looking around. Rates and rating plans vary. A cheaper premium may be available.
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  #40  
Old 03-20-2002, 08:50 PM
D_Odds D_Odds is online now
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Quote:
Originally posted by Sweet Willy
OK. This has been fun and educational. No matter the reason, I will have to pay the premium. Which, BTW, is going to be $1470.00 per year compared to my $268.00 per year. So be it. Hint for next thread; My son is 15 and the federal and state governmant take taxes from his pay check. Representation anyone?
[hijack]Unless your son is making more than (insert current no-tax minimum here), it will all be reimbursed (Federally speaking). Most children that age end up paying no taxes; those that earn more than the minimum are being penalized by the government because of previous tax cheaters using children to hide their income.[/hijack]
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  #41  
Old 03-20-2002, 08:54 PM
D_Odds D_Odds is online now
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Quote:
Originally posted by Sweet Willy
Which, BTW, is going to be $1470.00 per year compared to my $268.00 per year.
I was right. I pay more in insurance for a new car in NY, despite (i)being over 25 and (ii)having no accidents or tickets.

However, like Sua now, I went for a quite few years with no car, so my current insurance history is a little over two years old.
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  #42  
Old 03-20-2002, 10:09 PM
Sweet Willy Sweet Willy is offline
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Which, BTW, is going to be $1470.00 per year compared to my $268.00 per year.

these figures are for the lowest limits of liability in NC. I think they are 25k / 50k. A new car, under lien, would require collision and / or comprehensive and would cost more. And yes you are right about the refund of the taxes. Under 8k and you don't even have to file. But you should to get your money plus interest back. Oh wait....there is no interest. That only happens when I owe the government money that is rightfully thiers.
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  #43  
Old 03-21-2002, 01:30 AM
David Simmons David Simmons is offline
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Quote:
Originally posted by Sweet Willy
Oh wait....there is no interest. That only happens when I owe the government money that is rightfully thiers.
Are you sure about this? It seems to me that the IRS has a certain amount of time to get you your refund. I'm not sure what that time is, maybe 90 days. After that time elapses I think you are paid interest.
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  #44  
Old 03-21-2002, 03:22 AM
Mr2001 Mr2001 is offline
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I think he means the interest they aren't paying to use his money all year - if he pays $1000 of tax throughout the year, and the IRS pays back $1000 at the end of the year, he has effectively let them borrow the money for free.
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  #45  
Old 03-21-2002, 07:24 AM
SkeptiJess SkeptiJess is offline
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Ouch, Sweet Willy. Is that figure for your son based on him having exclusive use of a car or occasional use of one of yours?

This thread prompted me to call me insurance company about my own son. He'll be taking driver's ed next year and will probably be getting his license in around 12 months -- he's 15 now. Anyway, my insurance company offers a good student discount (I plan to use this information as leverage in the ongoing homework-wars). For occasional use of one of our cars, insurance for Nick would run $1116 a year, without the good student discount. With the good student discount his insurance will cost $730 a year -- a significant difference. There's a discount for completing driver's ed as well, but I didn't get the figure for that. Maybe you need to shop around a little? I can't imagine that the VA rates would be much more expensive than the NC rates -- in fact, you are paying less (for your own insurance) than we do on any of our vehicles (we pay ~$300 for the 1986 Harley, ~$700 for the 2000 Jetta and ~$550 for the 1995 Windstar).

Jess
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  #46  
Old 03-21-2002, 04:51 PM
Sweet Willy Sweet Willy is offline
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Yes Mr2001 , I am refering to the apparent borowing of his money for the year. I am currently paying interest and penalties for the $700 I owed from last years tax.

Jess , The $268 is the lower liability premium for my '85 RX7. I have a good driver discount and multiple vehicle discount. The premium for my '92 Trooper is slightly higher bringing the total premium to around $700 per year for both. (Allstate). The $1470 figure comes from my ex - step daughter whom I insured last year. She got her own car and I agreed to pay the first 6 months insurance. I shopped it around... and around...never heard anything about good student discount. Gieco and Allstate were the cheapest at $735 per term. The circumstances will be the same for my son. He will have his own car in his own name. The problem I have with putting him on my policy is that if he does get a ticket it will stick to me for three years. If he gets a ticket on his own policy he will have to find a way to pay it or give up driving priviledges.
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  #47  
Old 03-21-2002, 05:11 PM
sailor sailor is offline
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>> My son is nearing the legal age to drive an automobile. He is a very safe and experienced driver.

>> The problem I have with putting him on my policy is that if he does get a ticket it will stick to me for three years.

Am I the only one to see some irony here? Sweet Willy you have gone to great lengths to convince us your son is such a safe driver that the insurance company should have no problem backing him to the tune of several hundred thousand dollars and yet you hesitate to put him on your own policy in case something untoward may happen which may raise your premium.

To those who complain about how mandatory and how expensive insurance is I would propose the following: Pass a law which says you can self insure if you deposit a guarantee with the State to the extent of your mandatory insurance coverage. Suppose your state requires you to have $100,000 in liability insurance. You deposit a guarantee (bank deposits, home mortgage, whatever) enough to cover that and which can only be released by the state after your period is over. If you are so confident your son is such a low risk, would you put your home on the line? If yes, then fine, no problem (just don't whine if you lose your home). But if the answer is no, why do you think someone else would be willing to risk an equivalent amount?
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  #48  
Old 03-21-2002, 05:24 PM
Sweet Willy Sweet Willy is offline
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Sailor ,

My son will have his own car and his own insurance policy. This will encourage him to be safe and to drive the speed limit. If he does get a speeding ticket ( and I grant that he very well may ) it will then be his responsibility to pay the insurance. OTOH, if he is on my policy a ticket will cause my insurance rates to rise even though I am not a bad driver.

Quote:
But if the answer is no, why do you think someone else would be willing to risk an equivalent amount?
Maybe because they stand to make a hefty profit from the overwhelming majority of young drivers that never file a claim?
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  #49  
Old 03-21-2002, 05:29 PM
Sweet Willy Sweet Willy is offline
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Quote:
Suppose your state requires you to have $100,000 in liability insurance. You deposit a guarantee (bank deposits, home mortgage, whatever) enough to cover that and which can only be released by the state after your period is over.
Also Sailor,

Why would you think I should guarantee the full amount while insurance companies are required to post only a very small percentage of thier actual liability? The rest is subsidized by "re insurance facitlities" funded by your tax dollars and additonal premiums on your policy.
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  #50  
Old 03-21-2002, 05:41 PM
Riboflavin Riboflavin is offline
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Sailor,

A lot of states do let you self-insure by putting up an (interest-free) bond for the minimum liability amount. Of course, tying up that much money is generally not a good idea, but you can do it.

Oh and Willy, of course the insurance companies are making a profit. If they didn't make a profit, they'd go out of business and no one would be there to pay off your insurance claim. Complaining that they'll make a profit off of your son (who you won't even put on your own policy) if he doesn't get in an accident is absurd - how would an insurance company function if it both lost money on people who make claims (like they currently do) and didn't make any money on people who don't make claims (like you propose)?
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