It’s b.s. that non-driving factors set auto insurance rates in NJ

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I’m not complaining for me. My auto insurance rates are livable. For many, though, they’re being priced out of being legal.

When auto insurance companies continue to be allowed to set rates based on credit scores, occupation, ZIP code, etc., some folks are inevitably going to be priced out of compliance and risk driving without coverage. This helps no one.

While the industry claims your credit score or your occupation is a good predictor of whether you’ll be in a crash, it’s a weak argument. Here’s why.

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Take credit score for example. The poorer the person, the more likely they may sometimes be late paying a utility bill or a credit card bill. Their credit score drops. Now is it that they’re really more likely to have an accident than a more well-off person? Or is it that when the well-off person has a fender bender they may have the financial means to not put in a claim and pay for the repair themselves in order to avoid their rates going up? The poor person doesn’t have that luxury. God forbid the poor person puts in a claim and uses the very product they’re paying for.

That factor alone misleads one into believing those with better credit scores have fewer accidents. Fewer claims does not necessarily mean fewer accidents.

Does it make sense that a dentist is necessarily a better driver than a warehouse worker based solely on occupation? I believe these companies’ actuaries can manipulate these numbers in whatever fashion the company requests to get the result they want.

I also believe the only fair way to set insurance rates is by using driving data. Tickets. At-fault accidents. Not credit scores or whether you own your home versus rent. I don’t care what the numbers say.

If the numbers showed people with brown hair are more likely than people with blond or black hair to get in accidents, should all brown-haired people pay more? If people with blue cars are more likely to get speeding tickets, should they pay more than people with silver cars?

You begin to see how capricious this is.

Base it on what the person actually has or has not done behind the wheel. Not what they might do based on irrelevant issues.

There is legislation that would take it out of the hands of the Department of Banking and Insurance, which could on its own put a stop to these practices but won’t. It’s Senate bill 357 and you can read the entire bill here.

Part of the legislation reads:

“This bill prohibits automobile insurers from assigning an insured or prospective insured to a rating tier based upon that person’s: (1) educational level; (2) employment, trade, business, occupation or profession; (3) employment status; (4) homeownership status; (5) marital status; or (6) credit score, or any information derived from an insured’s credit report.”

Now we’ll see if the cowards in Trenton have enough backbone to do what’s right for drivers and not for fat cat insurance executives.

Opinions expressed in the post above are those of New Jersey 101.5 talk show host Jeff Deminski only.

You can now listen to Deminski & Doyle — On Demand! Hear New Jersey’s favorite afternoon radio show any day of the week. Download the Deminski & Doyle show wherever you get podcasts, on our free app, or listen right now.

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