Politics has been described as the art of the possible. Perhaps setting car insurance rates should also be described this way.
Actuaries sitting around small numbers about the probability of accidents has led to some very fraudulent practices on the part of insurance companies.
In New Jersey and many other states, insurance companies are allowed to charge you more just because your credit score is lower. They claim they have reviewed the data and there is a link to the accidents.
If there is any connection, the truth is far more likely to be that there is a connection in accidents where people who decide to file a claim cost the insurance companies money. People who experience financial difficulties are the ones who will have a lower credit score. It probably doesn’t mean they have more accidents than their wealthier neighbor. This likely means that the rich neighbor will pick up the cost of the fender out of pocket rather than risk a claim that could raise his own insurance rates. So let’s call it what it really is from the insurance companies. Greed.
Here’s another one. The moment you get divorced, insurance companies have decided that you are a riskier driver. Again, are you suddenly driving worse because you’re single? Highly doubtful. It probably goes back to the same reason. finance.
Divorce sets people back. Divorce is expensive. If you come out of this without financial damage, you are the rare case. Again, when you’re suffering financially, you may have no choice but to file a small claims claim, unlike when you were married and doing better financially and maybe shouldered those expenses and didn’t go through insurance .
So let’s stop this talk that insurance companies in New Jersey really are at risk of a crash. They’re just looking at the risk of having to shell out some money. God forbid someone files a claim and ends up using the insurance they’ve been paying for for years. What a racket.
So I got to thinking what other dumb ways can insurance companies come up with to set rates? If they want to pretend it’s just about crash risk, have they looked at whether hair color correlates with who crashes more? We tend to accept the unfair status quo of setting interest rates on things like credit scores. But imagine the public outcry if they suddenly started charging redheads more money and blondes less.
How about the color of your car? There is actual data to support this. A study found that certain car colors were more or less likely to be involved in accidents.
Who would pay the most in this half-assed scheme?
Owners of black cars. The study shows that black cars are as much as 47% more likely to be involved in a collision. There is actual data backup. So why don’t insurance companies track car color?
I’ll tell you why.
See the examples of credit score and divorce. Because the color of the car will have nothing to do with whether someone is more or less likely to make a claim. Money is all they really care about.
Here’s how the study breaks down which car colors are most and least likely to be involved in a crash.
A study published in Money Super Market found that black cars were 47% more likely to be involved in collisions than cars of any other colour.
The second most dangerous car color. Gray cars pose an 11% higher risk than the safest car color we’ll get to.
10% more risk than the safest.
This popular color carries a 7% higher risk.
This is the safest colorful car you can drive. It is 12% less likely to be involved in an accident than a black car. And that’s in all weather and light conditions.
Your banana car will be the second safest on the list. If you don’t mind driving a car that looks like a banana, that is.
Orange is NOT the new black. This is one of the safest colors from a statistical point of view.
It’s not a popular choice, but the theory behind why it’s the fourth safest car color is simply that it stands out so much.
The opinions expressed in the post above are solely those of New Jersey 101.5 talk show host Jeff Deminski.
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