Personal Finance >
Auto Insurance
Get a Widget for this title
RSS FeedInsurance should be required for the driver not the vehicle
Results so far:
| Disagree | 35% | 144 votes | Total: 410 votes | |
| Agree | 65% | 266 votes |
Disagree
Write now
Print
Invite a writer™
Add to FavoritesIf you want to have the ability to finance a car purchase and receive lower rates for owning a statistically safer vehicle, then you must be in favor of attaching coverage to the vehicle and not the driver. Coverage tied to a vehicle is the most accurate way to assess risk, provide a competitive rate for coverage, and also provides the mechanism of asset protection allowing banks to provide auto loans.
This does not mean you are not covered in other vehicles - you almost certainly will be. All the major carriers will extend coverage to their drivers if the vehicle they are operating is not protected. The most common example of this is the rental car. Rental car companies rely on your personal coverage to protect their vehicles. That is why they are so interested in confirming your coverage before they hand you the keys. You can be sure they are not doing this out of concern for you!
Insurers need a basis for establishing risks. They do this by looking at the type of vehicle involved as well as the primary drivers of those vehicles. For the drivers they consider such factors as age, loss history, marital status and the always controversial credit rating. They take the driver score and use this to modify their base vehicle score for the vehicles these folks will be driving. Vehicles differ in weight, horsepower and value. More expensive cars cost more to fix. Vehicles that weigh more can cause more damage to other vehicles in a crash. Vehicles with higher horsepower ratings are more likely to be driven faster and have a higher propensity to be involved in accidents. Insurers need to consider these factors to establish an accurate rate for the risk they are undertaking. Without using the vehicle as the basis, they would need to assume that their drivers are behind the wheel of a very expensive, high horsepower, high weight vehicle in order to protect themselves from the risk of an accident. That translates to higher rates for you an I.
Most of us also carry first party protection for damage to our cars. This coverage protects your own vehicle in the event you are involved in an accident or your vehicle is stolen for instance. You have to carry this protection if you have the vehicle financed to protect the value of that vehicle for the financing institution. Insuring a driver and not the property would be simply unacceptable to a lending institution as they would have no assurance that at any one time the person behind the wheel would be covered. Also, in the case of thefts, vandalism or acts of God (tornadoes, hail, etc) these vehicles would have no coverage at all as there would be no driver. By attaching coverage to the vehicle, the insurance industry provides the protection needed for us to be able to take out car loans.
There is a reason the bulk of policies are tied to vehicles and not drivers. It makes the most sense and is in the best interest of the insurance company's customers. Most companies do offer insurance tied to drivers, they are called bond policies. These policies are limited to liability coverage and are generally significantly more expensive than a traditional policy. Because they are not competitively rated they are usually only taken out by customers directed to do so by a governing agency or who do not qualify for a standard auto product due to driving history or predicted driving activities. So to argue for insuring the driver over the vehicle, you in essence are arguing for higher rates and no auto loans. Not a popular position in my view.
Learn more about this author, Todd Raubenolt.
Click here to send this author comments or questions.
Agree
This was an easy choice. Most insurance companies today base insurance rates on a variety of things including credit report, type of car being insured, estimated mileage driven annually, and geographic location (this also based on garage kept or not).
Cities with higher automobile crime rates typically cost residents more in premiums.
I own an early 2000 Chevrolet 4 door Tracker equipped with four-wheel drive. This car is considered an SUV because it "looks" like one. However, it is the size of a Subaru Forester.
When I think of SUV, I think of Expeditions, Tahoes, Suburbans, and other bulldozer-sized vehicles that tower above me in traffic. My car is penalized because of this label when "station wagon" would be a more accurate description of it.
I am also penalized because it is 4WD. Living in a high snowfall climate, driving this vehicle without 4WD would result in more accidents than with it, yet insurance companies penalize owners for having what could be a "safety" feature increasing stability and traction on icy surfaces (as long as good judgment is used when driving on slick roads).
I have never filed a claim against my vehicles. I have owned another 4x4 pickup for going on 23 years without ever filing a claim. Yet because insurance companies base their rates on what "some have done" and believing that 4x4 automatically means 4-wheeling, they apply penalties to all owning this feature.
Have you seen a Tracker!? It fits inside a standard garage with plenty of room left all around! If I were to have an accident, I am certain that unless I hit a plastic beach ball, my car would suffer the brunt of the damages and the other car driver would be hard pressed to locate any damage.
My car is equipped with air bags and as many safety features as were available the year it was marketed.
I, on the other hand, have close to 30 years driving experience, never filed a claim EVER against a vehicle insurer, have never caused an accident although I have been rear-ended twice due to inattention and negligence of the other drivers (yet neither caused damage to my vehicle requiring repairs).
I drive approximately 1,500 miles annually (not a typo, it is actually 1,500) in an average year. My car spends 99.98% of its time inside my garage, yet I pay full insurance prices as if it were risked daily in high traffic areas.
In addition, I live in an extremely rural area. The nearest neighbor right now is about mile away (or further) so it isn't like there is great risk of fender benders, etc. We have a large driveway, so even if I was to park it outside the garage, it is still off the road and relatively safe from most harm that can befall cars including theft, vandalism, sideswipes, and other damages.
My second vehicle may be driven 500 miles (this estimate is on the high side) annually. This year alone, I have put two full tanks of gas in (because I helped someone move with it).
I have two cars and an ATV. The ATV is not insured because its main use if for snow removal purposes in winter (from the long driveway) and workhorse in the yard in the summer, when needed.
Insuring individuals, based on their driving record and annual mileage makes more fiscal sense (except insurance companies will not have as much revenue coming in) then insuring cars that spend most of their time garaged and parked to those who rarely are on the roads with them.
Of course, most companies wouldn't like that due to lost revenue from those who spend their time anywhere but on the nation's highways.
Individual insurance makes more sense for those who drive less or have cars misclassified.
It would be great if states allowed drivers to insure themselves instead of vehicles and if insurance companies assigned reasonable rates for this. However, with the economy the way it is and wildfires, tornadoes, hurricanes, and other natural disasters causing record monetary damages, it is unlikely this will catch on nationwide.
Learn more about this author, B. L. Babb.
Click here to send this author comments or questions.
Difference of opinion? Debate now.
- Auto Insurance
- Teens and car insurance: Who should pay?
