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Although I understand the argument on the other side, that a person's driving record should dictate their insurance rates regardless of the type of car that he/she drives, it is a flawed way to think about insurance. Although it is true that a person's driving record is taken into account (meaning that if you get traffic tickets or commit some other kind of automobile wrong) if his/her rates are increased or decreased based upon how high of a risk he/she is behind the wheel, it is not how your original rate is calculated. Your base rate or original rate is based primarily on the type of car you drive, and this makes complete sense.

Pretend that you drive a high-end luxury car or a high-end sports car. You have never had a traffic ticket, have never sped, and have never been in a car accident. Basically, you are one of the best drivers on the road. Pretend further that your friend drives a low-end economy car. Your friend has never had a traffic ticket, has never sped, and has never been in a car accident. Basically, your friend is also one of the best drivers on the road. Under the theory that insurance should depend on the person and not the car, you and your friend should pay the same insurance rates. However, as I will explain, this does not logically follow.

If your car cost, for example, $80,000, and your friend's car cost $15,000, we can agree that your car was far more expensive to purchase than your friend's. As such, we can further agree that your car has many more features, a bigger, more powerful engine, and a body that is specific to the car (stronger if it is a luxury car and lighter if it is a sport's car). As such, your car will cost far more to fix than will your friend's should you get into a car accident. Additionally, depending on the rarity of your car, parts will also be more expensive.

Based upon these facts, it is not economically possible that you and your friend pay the same amount of money for your respective insurances. Even though in our example neither of you have ever been in a car accident, it is a statistical certainty that regardless of your driving ability, you will be involved in a car accident (either by your own fault or by the fault of another). As such, your insurance will have to pay to get your car fixed at some point. Therefore, if your car is greater than five times more expensive than your friend's, your repair bill will be more expensive for an identical accident. As such, your rates should be higher to compensate for such a discrepancy.

Paying insurance is never fun, but if you can afford an $80,000 car, you can also afford the insurance rate that accompanies such a car. Because your car would be more expensive to fix than your friend's (given our example) your inflated insurance rate is justified.

Learn more about this author, Marco Angioni II.
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