Rethinking Auto Insurance

We bought a new Subaru Forester in late 2010. It had been a long time coming. My Ford Escort was increasingly showing its age, among other things failing to start in really cold weather. For a couple months, we had three cars. I kept the Escort parked out front and used it for relatively short trips. It was handy. It also saved gas because it got roughly 27-33 miles to the gallon instead of the Forester’s 20-25.

It was a nice arrangement and I would have kept driving it until it stopped running. I still see it being driven around town by its new owner, so approaching two years later, it’s still going.

I sold it for a very small sum. The main reason I did was that I didn’t want the expense of insurance and registration. My father-in-law is about to sell one of his cars for the same reason.

The thought occurs to me that one minor thing we might be able to do to encourage people to drive more fuel-efficient vehicles is to change the way that we do auto insurance (and maybe registration). There isn’t much good reason, in my mind, that we’re charged per-car when we have more cars than drivers. The amount of road time with two people and one car is bound to make a difference than two people and two cars, but with more cars than drivers, one car is typically going to be on the sidelines at any given time. You might have to worry about them loaning the car out, but that’s really about it.

A lot of auto insurance is guesswork. There are factors we let them use and don’t let them use, but one of the biggest (how many miles we drive) is on the honor system and almost nobody I knows is particularly honorable. Maybe my insurance company is unique, but they could police this sort of thing more than they do. For whatever reason, it isn’t that big of a priority. There are estimates of who is driving which car more frequently, but these are just estimates and that doesn’t change by focusing more on the driver than the car.

Anyhow, there are reasons why going per-driver rather than per-car would be a good idea, environmentally speaking: it would encourage people to have lighter vehicles. The main reason we went with a crossover this time around was that sometimes we need to cargo/family space. Our next vehicle may be even larger. Most of the time, we don’t need this. But when we do, it’s good to have around. There would be real advantages to having an Escort sitting out front for trips that don’t matter much. Paying the extra insurance, however, complicates that. For no really good reason.

I consider Smart cars to be neat. I don’t think I’ll ever do the motorcycle thing, but I am just as happy in a tiny little car as a big one. But I can’t do the tiny little car, really, even for short trips by myself, because I need a family vehicle, I need cargo space, and I’m not going to pay the extra insurance on the same amount of driving. If you want me to drive a small car, you ought not penalize me for also having a larger one when I need it.

Will Truman

Will Truman is the Editor-in-Chief of Ordinary Times. He is also on Twitter.


  1. I’m tempted to make a “White People Problems” joke, but I know you are talking about something very real and legitimate here. I, too, wonder about the logic of insuring cars. The best I can come up with is that the variance in value of the cars is what matters. If one car is worth $50K and the other is worth $5K, they need different policies. If you wanted one policy to cover both, I’m not sure you really save money.

    • Yeah, it’s not big in the grand scheme of things, but it does seem to be one of those things that might be preventing at least some people from doing what we want them to do.

      It seems to me that current policy accounts for both the car and the driver, so they’re pricing it for both (as well as other things, which should be constant). It just sort of seems to me that you could be defining it by the driver than the car (instead of looking at the car and saying “This car will be driven 60% of the time by this profile and 40% of the time by this other profile” saying “This driver will be driving this car 60% of the time and that car 40% of the time” and pricing it that way.

      • That makes sense. I’ve toyed with the idea of getting something real small and fuel efficient (maybe even one of those new-fangled three-wheeler things, if they are indeed fuel efficient) to go back and forth from work. We currently have two cars but commute separately. Zazzy really likes her CRV because it helps her feel safe on the road. I drive the Corolla, but even this is more than I need for my 15 minute drive to work. The cost of insurance is indeed a deterrent, since I’d still need a conventional car for cold weather or if I’m hauling anything on a particular day.

        • Yeah. One of the real roadblocks for me to get a small car is that sometimes you need a larger one. And if you need a larger one sometimes, the incentives are that you drive the larger one all the time.

          I love Smart cars and think it would be neat as heck to drive one even if it meant trying to contort myself into one. But I could almost never get one because sometimes I need a car with at least some cargo capacity or more than a two-seater. So if I wanted to drive a Smart around town, I’d need a pickup or crossover or something standing by.

  2. I am not an underwriter, but to my knowledge, there are aspects of the driver that matter significantly — history of moving violations, marriage, commuting distance, and driving experience are all taken into account. Maybe states other than California do not regulate underwriting as extensively as I’m used to here.

    • Yeah. The current system looks at drivers but counts cars. I would prefer a system that looked at cars but (mostly) counts drivers.

  3. Well, I don’t see how you get away from taking the specific cars into consideration, Will. First of all, they’re worth different amounts of money if one or the other had to be totaled. They’re also going to have different repair cost profiles. Then there’s things like anti-lock brakes, airbags, rollover susceptibility, etc.

    I get your point that the two of you can only ever be driving, at most, two cars no matter how many you own. On the other hand, I would hate to be Jay Leno’s ins. agent when the earthquake or fire takes out that warehouse he uses to house his collection.

    Doesn’t your company offer a multi-car discount? Doesn’t that at least sort of address your concern?

    • Taking specific cars, like taking specific people, into account makes sense. It’s taking the number of cars into account that I object to. There are reasons for comprehensive coverage to take the number of cars into account, but not nearly as much for collision or liability, unless there is fear that the car is being loaned out. Even with comprehensive, this can be mitigated with caps and/or limiting the number of cars you can comprehensively insure without a separate policy.

      If my wife and I have just a BMW and a Volkswagon (two expensive cars to insure), and then get a used Ford Escort for short trips (a cheap car to insure), overall insurance (at least for liability and collision) should stay the same or go down. Instead, it goes up. Multiple car discounts are nice, but it’s still moving people in the wrong direction. The insurance company should, if anything, welcome the guy with the BMW spending as much driving time in the Escort as possible.

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