Those pesky zip codes
- Author Amanda Patterson
- Published July 27, 2011
- Word count 526
There's a fundamental unfairness about penalizing drivers for what happens in their neighborhood. In a totally fair world, insurance would be all about whether each person drives safely and avoids getting into accidents. The people who go through life without ever making a claim would therefore be rewarded by ever lower premiums. After all, if you pay your premiums on time, every year, without ever making a claim, you build up a big credit against the time your luck runs out. Except, life isn't fair. Look around and you'll see almost every state allows its insurance companies to use zip codes as one of the key indicators when it comes to setting the premium rate. The result can be that good drivers pay more than bad drivers. Except in California, that is. If we go back to 1988, the voters of the Golden State decided enough was enough and passed Proposition 103 which required insurers to base their rates on the safety record, the years of driving experience, and the number of miles driven. Needless to say, the local insurers were less than happy and so a big rearguard action was mounted to slow down implementation. It took until 2003 for the Commissioner to issue the relevant regulations. It's now estimated that Californians have saved billions of dollars.
So what's really going on? Well, insurance is all about estimating the risks that a claim will be made. So when it comes to third party claims, the liability can be based on the driver's safety record. Whether you collide with another driver, hit someone on the sidewalk or fail to avoid a tree that suddenly steps out in front of you, is all down to how well you drive. But when it comes to comprehensive cover, we start talking about things not under your control. Take the weather, for example. If you live in an area where tornadoes routinely pick vehicles up and distribute their parts over the nearby counties, or where flood waters rise and soak the electrical systems and upholstery, we would not begrudge the insurers the freedom to take account of local conditions. So why should we complain when the theft and vandalism rates are high in your neighborhood?
Well, it's at this point the debate gets a little fuzzy. Some people drag in racial profiling because a significant proportions of the neighborhoods happen to have high concentrations of people in different racial and ethnic groups. Others argue this is a form of tax based on where people live. This might be acceptable if the additional premiums paid for an improvement in policing but, as it is, all that happens is that people pay and claim more.
No one says the insurance companies have to be absolutely fair. Indeed, there's an argument the insurers are right to load car insurance rates when the auto theft and vandalism rates are high. That's why the Californian voters passed Proposition 103. The rates of car theft have been consistently high in California for decades. They tired of seeing their car insurance quotes rising so fast and defended themselves through the ballot box. Self-interest is a big motivator when there's money involved.
Amanda Patterson is always ready to share his professional point of view on a topic. To see what Amanda Patterson has written about other things visit [http://www.insurs-online.com/problems-in-your-neighborhood.html](http://www.insurs-online.com/problems-in-your-neighborhood.html).
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- Investigating the Role of Government in Addressing Crash for Cash Insurance Fraud: Future Recommendations and Studies
- The Importance of MOT and Road Tax Disc in Vehicle Maintenance: Future Studies and Recommendations
- Unlocking Affordable Protection: Unveiling the Cheapest Auto Insurance Quotes in Laredo, TX
- Benefits Of Rent Guarantee Insurance
- Driving Safety Tips and Advanced Protection with Car Insurance
- The Best Motorcycle Insurance Forum USA 2021
- Auto insurance - Things Every Canadian Should Know!
- 5 Things to Know Before Choosing Car Insurance
- What the Hail is going on with Colorado Storms?
- Get The Best Home Insurance Leads From 50 States Insurance Leads
- Why Auto Insurance Providers Care About Your Past Claims
- Insurance, Blockchain & Oracles
- A Brief Guide to Cyber Liability Insurance
- Smart Questions for Your Insurance Broker, Perth Business Owners Should Ask
- All You Should Know About Product Liability Insurance
- Tips to Make Your Business Insurance Renewal Easier
- Brand Brand Nomberg & Rosenbaum, LLP; NYC Auto Accident Attorneys
- When and How to Go From Part Time to Full Time in the Motor Trade?
- What you need to know about Auto Insurance
- Proving a Defect Car Part Was Responsible for Your Car Accident
- Whose Insurance Pays for an Accident in a Rental Car?
- Loya's Auto Insurance Place
- Ocean Harbor Casualty Insurance Company
- Almost 140 year old Central Insurance Company
- Good2Go Auto Insurance Atlanta
- Independent Car Insurance Estimator
- Car Insurance Estimator Guide
- Citizens Insurance Michigan
- How to Get Accurate Car Insurance Estimate Online
- Understanding the basics and simple methodology of Auto Insurance