Proposal to set auto insurance rate by neighborhood
From NBC4i.com:
Could Your Neighborhood Dictate Your Insurance Rate?
By AMANDA MURPHYAn Ohio Senator is proposing new legislation, saying residents in Columbus’ safest neighborhoods are overpaying because insurance companies are required to set rates based on the city you live in, not your neighborhood. Under a newly proposed law, if you live in an upscale neighborhood that does not see a lot of crime, your auto insurance rates could go down.
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Related Tags: auto insurance • cars • driving • neighborhoods • ohio • Politics • senate
May 7th, 2009 at 12:45 pm
Insurance companies have tried this before…I believe it was called redlining. It resulted in some nice programs (the community reinvestment act), after it helped create deplorable conditions for poor and minority citizens.
May 7th, 2009 at 12:48 pm
I assumed this already happened? My rates used to change every time I moved in TX and it has in my 2 moves here 43215 -> 43201 -> 43215. Strange, wonder what the change is for if it’s not because I’m moving.
May 7th, 2009 at 12:53 pm
What a bunch of crap. Yeah, I choose to live in Olde Towne over Vic Village. Does this pinhead think that if we could afford a better neighborhood that we wouldn’t move? My consequences for having a crappy economy, evidently, could be higher insurance premiums. What a turbo-douche.
May 7th, 2009 at 12:53 pm
This is ridiculous. Your driving patterns are not dictated by your neighborhood. This would be a deterrent from people who want to invest in certain parts of town as well.
May 7th, 2009 at 12:57 pm
The rich will pay less and the poor will pay more.
I think this is bullshit but maybe I don’t know what I am really talking about I don’t work in insurance. It still ticks me off if it’s not a utility company raping you for money then the insurance company will >:(
May 7th, 2009 at 1:07 pm
It seems clear to me that lobbyists are the grease to Goodman’s gears.
May 7th, 2009 at 1:23 pm
There may be an assumption that low income areas will increase the chance you will have your car damaged in a break in, or sideswiped in a hit and run. Maybe also because the cars in low income area are older, and more likely to fail, causing an accident? I’m sure the insurance companies know that answers to these questions.
May 7th, 2009 at 1:23 pm
@summertimeoh - my understanding is that insurance companies are allowed to rate based on their own claims in cities or areas, but not by neighborhood per se. One would assume that there would be an indirect relation to higher rates in more crime-likely locales, but not directly because of it. Redlining isn’t allowed.
Other than the fairness issue, this is also bullshit because it’s a direct disincentive to developing mixed-income neighborhoods. Anti-development NIMBY-ism at its finest.
May 7th, 2009 at 1:35 pm
Insurance companies pretty much already follow this…the rates on all of our vehicles (4 total) went up a total of $30 a month when they realized we didn’t live in Powell at my parents address. (My old car used to be in my dad’s name so they kept all of our cars in their address until we no longer had that car) Our neighborhood is at higher risk for break-ins–has nothing to do with driving patterns
May 7th, 2009 at 1:44 pm
misskitty Says: The rich will pay less and the poor will pay more.
Not necessarily. There are cheap apartments in good neighborhoods, and people with money willing to invest in bad ones.
The problem is that auto claims don’t always happen on your own street. You can get in a wreck anywhere, and your car can be broken into anywhere, and this type of legislature throws all of that out the window.
May 7th, 2009 at 1:50 pm
UNMITIGATED HORSESHIT! Are we supposed to be stupid enough to believe that the insurance customers are pestering Goodman to push this so they can make less profit? Oh, they “assured him the change would cut costs for residents in safer neighborhoods without punishing residents in higher-crime neighborhoods”. That just melts my heart. How long would it be before they went back on THAT promise? Six months? A year at best? Not EVERY neighborhood is a “community of choice”. In the very worst neighborhoods are people who have the least choices and would be hurt the most by this proposed legislation. SHAMEFUL.
May 7th, 2009 at 2:10 pm
Walker Says: The problem is that auto claims don’t always happen on your own street. You can get in a wreck anywhere, and your car can be broken into anywhere …
Yes, but - think about your own driving pattern. I would guess you spend the highest amount of time driving down the street in front of your house, and less time driving the streets further away (it would map to a circular gradient centered on your home, maybe with an arm extended to your route to work). I’m fairly certain your chance of accident correlates to the places you drive the most often.
But as Wootie says, the insurance companies don’t want this change because of “fairness”, it will allow them to charge less to people living in high income areas, and sell a greater number of policies to them.
May 7th, 2009 at 2:20 pm
I just sent him an email requesting a draft of the legislation and his reasoning behind supporting it. Here’s what I got back:
Thank you for contacting my office.
As you can imagine, I receive a large volume of email messages and U.S. mail and it is often times difficult to get a timely response out. However, your email is important to me and I would be happy to address questions and concerns of constituents from the 3rd Ohio Senate District as soon as possible.
If you are a constituent and have not included your name and mailing address, please reply with this information so I will be better able to assist you.
Please do not hesitate to contact me if I can ever be of future assistance.
Sincerely,
David Goodman
State Senator
3rd Senate District
According to this, he is only interested in speaking to constituents from the 3rd District. Bummer.
May 7th, 2009 at 2:21 pm
<i>4 Walker Says:
May 7th, 2009 at 12:53 pm
This is ridiculous. Your driving patterns are not dictated by your neighborhood. This would be a deterrent from people who want to invest in certain parts of town as well.</i>
They do this in New Jersey, its not your driving patterns, its the supposed liklihood of your car being stolen or broken into. Living near Trenton NJ, which at one point had an extremely high rate of car theft, automatically raised your insurance premiums.
May 7th, 2009 at 2:43 pm
New Jersey had outrageous rates across the board until they began to deregulate and open the markets a few years back to competition.
My guess is that there is some validity to neighborhoods, but it would be a very small factor:
-Transients vs. permanent residents in area
-Renters vs. owners
-On-street vs. Off-street parking
-% uninsured vehicles in neighborhood
- Traffic flow through neighborhood
-Mix of commercial/residential etc
May 7th, 2009 at 2:52 pm
This is redlining. Those of us who live in the inner city (KLD, Hilltop, OTE, South Side, etc.) will see our premiums jump. This is a major disincentive for neighborhood revitalization in these areas. The rich will pay less and the poor will get screwed, again. His quote “I mean people choose to live in different parts of the city, and there are going to be consequences to that,” shows his complete ignorance (or perhaps willful ignorance might be a better term). I could not afford to buy a home in German Village so I shopped further down. Yes this was a choice, but one that was dictated by economic necessity.
May 7th, 2009 at 3:07 pm
GW_Justice Says: I’m fairly certain your chance of accident correlates to the places you drive the most often.
Sure, but that doesn’t always mean your own neighborhood. Many people work outside of their neighborhood or seek entertainment outside of their neighborhood. I’d say your car may be just as likely to be broken into while you’re out at a bar or at work as it as at home in most instances.
Personally, if I’m headed somewhere within my own neighborhood, I’ll walk. A little further, and I’ll bus. If I’m headed even further, I’ll drive. This proposed insurance system makes little sense for me.
May 7th, 2009 at 3:21 pm
Basically gives people a reason not to invest in the up and coming areas of a particular city. Just wonderful…
May 7th, 2009 at 3:45 pm
If you’re actually poor you don’t own a car either because you don’t want to or can’t. If this goes forward it gives all the more incentive for lower-income neighborhoods to become multi-model, which I see as a silver lining. These neighborhoods (aside from those housing a majority of OSU students) are the most hostile to those not in a car. Can’t say I’ll shed a tear for those who threatened me for being on a bike on a residential street of all places (For some reason people in the “Park” neighborhoods don’t like cyclists. That goes for Woodland and Livingston, I can only imagine what would happen to me in Driving Park). From my personal experience I’ve noticed that drivers in these neighborhoods are more agressive, so it wouldn’t surprise me that more accidents happen there. That said, it’s not right to punish everyone for someone’s mistake. Jack up bad drivers insurance way up and don’t punish good ones.
May 7th, 2009 at 3:46 pm
The majority of car wrecks happen within a 3 mile radius of your home.
It’s just like the fact that you are most likely to be killed in an accident inside your own home - it doesn’t have so much to do with homes being so dangerous, just that you spend so much time there.
Maybe the roads and intersections are more dangerous in poor parts of town, so the people who live there are most likely to be in wrecks.
May 7th, 2009 at 3:54 pm
That’s all fine and good, but it doesn’t seem to be the real reason behind this. Seems like it very much is a class divide and an assumption on the quality of the neighborhood. Which lends to a continuance of the negative stereotypes and the lack of growth and development. It ignores the complex and varied reasons why someone choses to live where they live and in a sense punishes them for those choices.
May 7th, 2009 at 4:15 pm
Ohio NEVER ceases to amaze. Ever.
May 7th, 2009 at 4:53 pm
this isn’t new. Happens already, always has. If I remember correctly, liability has to be priced by city, not zip, but collision and comp have always been priced by zip. Sorry, but it also makes sense.
If an insurer’s job is to price according to risk analysis, then if your risk of a claim is higher…your premium should be as well.
I don’t think anyone bitches when smokers are charged more for health insurance.
May 7th, 2009 at 5:43 pm
Another influence (upon premium) I don’t think anybody’s mentioned expressly yet is credit.
Insurance companies in their infinite, actuarial wisdom at one point determined one’s credit-worthiness to be an accurate indicator of one’s ‘insurability.’ And thus those with lower ‘insurance scores’ — often a number on a numeric scale of 1 - 10, though it varies from carrier to carrier, and is influenced by a whole slew of other factors, too — pretty much always pay more $.
Where it gets interesting, and this is why it’s important to shop, is that I could personally be in the top tier, insurance-score-wise, with one particular company, and in a middle, less-desirable tier with another company — all at the same time with the exact same credit.
In fact, when I switched agencies a couple years back and quoted coverage on our home and two autos, the difference in annualized premium from the highest to the lowest of the five companies I quoted was over $500. For the same exact coverage.
That’s a nice chunk of change.
It’s all numbers, though. Whole industry runs on numbers.
That being said, anybody check out the Nationwide iphone app yet? Actual utility. From the insurance industry. Go figure.
May 7th, 2009 at 6:13 pm
Core– people choose to smoke. Most people don’t choose NOT to live in New Albany. They can’t afford it. So they’re going to be punished for this? Really?