# Mercenary Insurance Practices **URL:** \ **Category:** The BBQ Pit\ **Created:** [August 22, 2006, 5:02pm UTC](https://boards.straightdope.com/t/mercenary-insurance-practices/369772 "2006-08-22T17:02:24Z")\ **Posts on this page:** 5\ **Page:** 5
**Author:** ![Giraffe](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/giraffe/32/129_2.png) [@Giraffe](https://boards.straightdope.com/u/Giraffe)\ **Post date:** [August 23, 2006, 9:19pm UTC](https://boards.straightdope.com/t/mercenary-insurance-practices/369772/81 "2006-08-23T21:19:54Z")
[QUOTE=kawaiitentaclebeast] I don’t understand this “gold plated Hummer” stuff. If you negligently damage my gold plated Hummer then why SHOUDN’T you have to pay for it? What does the fact that it’s a gold plated Hummer have to do with anything? [/QUOTE] I think the argument is that there is a point at which a rich person can place an unreasonably high liability burden on society as a whole. To be extreme about it, imagine I covered the surface of my car in original van Gogh paintings. Should every person in California have to carry $20 million in liability coverage in case they have a fender bender with me? (This is just a hypothetical, of course, as my car is already covered with Hello Kitty stickers and hard core pornography, and I like it that way.) ---
**Author:** ![Inigo\_Montoya](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/inigo_montoya/32/124_2.png) [@Inigo\_Montoya](https://boards.straightdope.com/u/Inigo_Montoya)\ **Post date:** [August 23, 2006, 9:26pm UTC](https://boards.straightdope.com/t/mercenary-insurance-practices/369772/82 "2006-08-23T21:26:18Z")
Giraffe–I once had to settle a total loss on a car where the guy had taken all manner of squirrel and rabbit bones and glued them in various patterns all over his car, inside and out–most notable was the large pentagram made entirely of squirrel skulls on the hood. He was convinced his car was a work of art and worth much, much money. Sort of irrelevant, I guess. But I shudder to think about settling a hot pink 96 Mustang covered in Hello Kitty hardcore porn. - glug glug glug \* ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [August 23, 2006, 9:29pm UTC](https://boards.straightdope.com/t/mercenary-insurance-practices/369772/83 "2006-08-23T21:29:45Z")
[QUOTE=Giraffe] (This is just a hypothetical, of course, as my car is already covered with Hello Kitty stickers and hard core pornography, and I like it that way.) [/QUOTE] “Kitty Porn”? Isn’t that illegal? 😛 ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [August 23, 2006, 10:09pm UTC](https://boards.straightdope.com/t/mercenary-insurance-practices/369772/84 "2006-08-23T22:09:36Z")
Hey, I’m not finished yet! Gee, the Insurance Commissioner denies that his new mandate creates subsidies. There’s a surprise. [QUOTE=DrDeth] But it’s \*not \* a better predictor of costs, or so the courts and Insurance Commissioner have ruled. [/quote] No, they’ve ruled that, by law, other factors must be given greater emphasis, whether they’re better predictors or not. Why do you think State Farm _wants_ to use zip codes if they aren’t a good predictor? Do you think they have a perverse desire to eschew profitable business in certain zip codes just because the customers’ skin is too dark for their taste? > [@](#): > > Those numbers are complete made up bullshit. Of _course_ they are. I’m illustrating the _possibility_ of location being a better predictor, not proving that it’s so. I don’t know State Farm’s costs by zip code and driver record, and neither do you. I do know, however, that there are often dramatic differences between urban and rural auto loss costs. Among numbers in the public domain, a study in Michgan from 1983 to 1988 (at which time Michigan was experiencing an identical controversy over its Essential Insurance Act) found the following annual average loss cost differences between Detroit and the rest of the state: ``` Detroit Rest of State ``` Bodily Injury $33.77 $22.52 Personal Injury Protection $99.59 $56.74 Uninsured Motorist $12.41 $2.38 Collision $169.16 $116.41 Comprehensive $168.07 $55.24 Total $483.00 $253.29 So what about it? Neither one of us knows whether driver record or location is more important in California. But, the law says, an insurer _must_ give greater weight to driver record. If driver record _really is_ more important, then all the law will accomplish will be to save misguided companies like State Farm from their own actuarial incompetence. State Farm’s profits will rise, since they’ll be pricing more in line with costs, and everybody will be happy. If location really is more important, then the law will result in a severe overcharge for rural drivers with bad records, a subsidy for urban drivers with good records, and two effects moving in opposite directions for rural drivers with good records and urban drivers with bad records. The net result will be a rural-to-urban subsidy and a bad-record-to-good-record subsidy. My money is on the second alternative, since I trust an insurance company–motivated only by profit–to make that determination more objectively than a politician responding to electoral pressure. So, who feels sorry for rural drivers with bad records? Nobody. They’re bupkuses out in the sticks, who have been in accidents. Ergo, we can raise their rates, give everybody else a break, and everybody will be happy. Except me. Because it’s _unfair_, damn it. ---
**Author:** ![DrunkOnion](https://avatars.discourse-cdn.com/v4/letter/d/3ab097/32.png) [@DrunkOnion](https://boards.straightdope.com/u/DrunkOnion)\ **Post date:** [August 24, 2006, 1:05am UTC](https://boards.straightdope.com/t/mercenary-insurance-practices/369772/85 "2006-08-24T01:05:08Z")
> [@](#): > > they’re going to be able to collect more than $20K from my insurance company. Yea right..You going to put a gun to the insurance company’s head and make them pay? Fucking Insurance Companies lowball the claiments everyday. They do their best to pay the least amount of money that they can get away with. You might carry 300k but your insurance company won’t pay it without a fight. Then some fucking lawyer will get a third of any money awarded to the victum. [Previous page](https://boards.straightdope.com/t/mercenary-insurance-practices/369772.md?page=4)