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If 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.
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