Car Insurance Rates: Star Struck?

Robert Farago
by Robert Farago
car insurance rates star struck

As much as I enjoy vigorous debate, I abhor pseudo-science. From The Bermuda Triangle to past life regression, I just can’t deal. If the subject matter in question is faith-based like, say, a talking salamander's role in the development of Mormonism, I’m good. But the moment an aspiring conversationalist tries to deploy scientific explanations for a fundamentally irrational belief system– aliens sucking up Air Force planes from the Gulf Of Mexico for anal experimentation or Joan of Arc reborn as a 42-year-old housewife in Hackensack, New Jersey– I’m out. So when I read that insurance quote provider Lee Romanov says your star sign affects your chances of having an automobile accident, I just had to ring her up. Yes, it's been that kind of day.

You can hear my righteous indignation on the podcast below. Truth be told, I've got no truck with Ms. Romanov’s basic assertion that automobile insurance industry rates seem capricious (even if she seems particularly oblivious the existence of actuarial tables). Certainly, one can understand the rational basis for mandatory car insurance: ensuring that drivers can pay for their mistakes. But in practice, the business is rife with greed, fraud, inequity and counterintuitive logic.

Here in Rhode Island, a state only slightly less corrupt than Botswana, insurance fraud is as common as people who drink their java with five sugars. I remember the first time I took a bent motor to a local auto body shop. The “repair specialist” took one look at the damage and asked “How ‘bout we claim $500 and I’ll kick you back a hundred?” Talk about a trick question. I don’t think the idea that his customers might put a higher value on the quality of the actual repairs than their ability to make a quick buck ever occurred to him. Or, for that matter, most of his customers.

According to a recent study, one out of every three Americans thinks it’s OK to pad their insurance claims. In dollar terms, insurance fraud costs the industry $30b a year. While health care and personal property fraud account for the lion's share of this thievery, the automotive part of the program racks-up some $8b (not including actual automotive theft). For example, on Saturday, the owner of Louis and Sons Auto Body in West New York was convicted of defrauding insurance companies out of $10k. Like tens of thousands of body shops across the nation, Louis Rivadeneira inflated claims and charged insurers for parts he never bought.

If you’re thinking “…and never installed” you’d be dead right. (Perhaps literally.) All those Americans happy to top-up their insurance claims might want to think about Louis’ “de-contenting” (i.e. leaving out parts or substituting inferior parts) the next time they drop off their car for repair. Never mind; the man received a fine, a slap on the wrists and promised never, ever to do it again. So policy holders and auto body shops can continue to commit fraud on an epic scale without fear of hard time. Of course, the insurance companies themselves complete this unholy trinity.

For example, all the safety equipment for which the major automotive insurers have lobbied so hard have added extra cost (not to mention weight and complexity) to the average automobile, without which your premium may be raised, with which you may not be any safer (e.g. ABS braking). Of course, all the safety-related bells and whistles don't lower drivers’ premiums that much because the cost of fixing them raises the cost of repair, which the insurer must then pay, which gives the auto body shop another chance to commit fraud, which raises premiums.

To be fair, the insurance industry’s major players shell out big bucks to try to crack down on fraud and protect their assets. Meanwhile, they stand by while the government gives driving licenses to people who can’t read a warning sign or, in fact, drive. And there are plenty of independent agencies– many with big name insurance company stickers on their doors– that are ready, willing and able to pocket premiums and not provide insurance (a growing scam for new and illegal immigrants) or sell policies by the month (just long enough for drivers to get their cars registered or their licenses renewed). Clearly, car insurance is a racket for many people on many levels.

In fact, the situation's so nuts that charging people premiums according to their astrological sign makes about as much sense as the current set-up. And while I believe that astrological readings are simply a combination of observation, guesswork, playing the law of averages and picking-up on psychological “tells,” I’m not against using the practice to get people to drive like responsible adults. “The moon is in Uranus– and so is your head if you talk on the cell while driving. And your son… Lenny? Liberace? Leo? Leo is getting retrogrades; don’t let him drive without an adult on any day with an ‘a’ in it.” Works for me.

[A free copy of Ms. Romanov's book "Car Carma" for the first person who can identify the astrological car referred to in the song with the lyrics "WELL SHE ISN'T!"]

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2 of 72 comments
  • Stephan Wilkinson Stephan Wilkinson on Dec 27, 2006

    People who buy car insurance from a company that avidly advertises with lizards and cavemen--hey, it's cute, and cheap--get what they deserve. I have Travelers, have for 35 years on cars, house and airplanes, and they've never let me down.

  • Ryan Ryan on Dec 28, 2006

    satire, at least big oil screws everyone over equally. Insurance is selective about who they screw over, and how hard they do it.

  • Tassos surprise surprise.A VW owner is selling a van on Cars and Bids today, and his name is "My VW Sucks"True Story, and no surprise either.Alfas are infinitely more unerliable (if that's possible).Enjoy!PS Tim,tomorrow your series is due for another glorious member of the Fix It Again Tony family of FIAT POS'sA Yugo.
  • Tassos Despite the incomplete results, this article was the most useful, by far, of all TTAC articles for the entire Q3
  • Jkross22 Pedestrian.... trapped.... in San Francisco. Man, there's a lot of truth in this article.
  • Arthur Dailey What the heck is an 'influencer'?And who would buy or do something because somebody on a social media site told them to or recommended/flogged something?Maybe I am just too old and cynical to understand those who actually are 'influenced'? But then I also never trusted or was 'influenced' by celebrity endorsements or product placements.However I did know and coach a teenager who became extremely wealthy because he set up a Youtube channel where people paid to watch him and his friends play video games.
  • Dukeisduke $8,000 for this rustbucket? It's a '73, not a '74 ("Registered and titled as a 1973…it looks like a ‘74 to me"), and anyway, mid to late '60s Alfa Berlinas are much more desirable.Even if you kept it in a garage and didn't drive it in the rain, it wouldn't stop rusting, it might just progress more slowly. This looks more like a parts car than something you'd drive. It needs rear main seals all over the car, so that oil leaks can slow down the rust, like all the oil on the underbody.