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> If you want an expensive car, you should pay for the insurance to cover it. Do you think there’s a difference in insurance premiums between the 2005 Ferrari

> If you want an expensive car, you should pay for the insurance to cover it. Do you think there’s a difference in insurance premiums between the 2005 Ferrari and 2005 Hyundai?

midoridensha 3y ago
I'm not an expert on car values or insurance. I'm guessing the 2005 Hyundai is pretty much worthless, while the 2005 Ferrari is still somewhat valuable. Maybe I should have picked an older Ferrari? Collectors still buy and sell certain models for a lot of money I think. If it helps, change my proposition to use a 2015 Ferrari as the example.
dangus 3y ago
True, but that’s really beside the point. Given the fact that everyone has some non-zero risk of being at-fault, it’s also true that people who own more expensive cars raise the insurance rates for everyone, including those who don’t choose to own cars that cost insane amounts to repair. If you have 9 cars that cost $10,000 to replace and one car that costs $100,000 to replace, that means your average cost to replace a vehicle among that population is $19,000. So in this hypothetical scenario the one asshole who owns the exotic car is nearly doubling the insurance cost for this population set.
- kcplate 3y ago
  > If you have 9 cars that cost $10,000 to replace and one car that costs $100,000 to replace, that means your average cost to replace a vehicle among that population is $19,000. Except that replacement average is only meaningful and the $100k exotic car an asshole if the rate is the same among all 9 drivers to insure all of those cars and the risk pool among all 9 drivers is identical. A $10k car driven 60k miles a year by a 17 year old male, owns potentially a larger slice of that $19k average then the $100k car if it’s driven 500 miles a year by a 55 year old woman. This is why insurance companies employ actuaries because it’s a tad more complex to calculate policy risk than adding up all insured values and dividing by the number of the insured.
  - dangus 3y ago
    I’m fully aware that my math is more crude than the real thing, it’s just there to illustrate the concept. I didn’t factor in the risk factor of the driver profiles because it’s nearly irrelevant to the discussion, since the discussion is surrounding the plain existence of an expensive car on the road versus not being on the road, all else being equal. It doesn’t really matter whether the owner or the expensive car is a perfect driver because the scenario under discussion is whether I need car insurance that covers high value damage to other people’s vehicles. If that super responsible wealthy person owned a less expensive car, the total amount of dollars paid out by insurance companies still decreases. In other words, if my insurance company knew for a fact that nobody on the road drove a car worth more than $10k, my rate would be lower, if only slightly. In your scenario where low value vehicle drivers are less responsible, it actually bolsters my point because those owners need to insure against being at-fault in crashes with the “more responsible and sophisticated wealthy vehicle owner.”

> If you want an expensive car, you should pay for the insurance to cover it. Do you think there’s a difference in insurance premiums between the 2005 Ferrari and 2005 Hyundai?

midoridensha 3y ago

I'm not an expert on car values or insurance. I'm guessing the 2005 Hyundai is pretty much worthless, while the 2005 Ferrari is still somewhat valuable. Maybe I should have picked an older Ferrari? Collectors still buy and sell certain models for a lot of money I think. If it helps, change my proposition to use a 2015 Ferrari as the example.

dangus 3y ago

True, but that’s really beside the point. Given the fact that everyone has some non-zero risk of being at-fault, it’s also true that people who own more expensive cars raise the insurance rates for everyone, including those who don’t choose to own cars that cost insane amounts to repair. If you have 9 cars that cost $10,000 to replace and one car that costs $100,000 to replace, that means your average cost to replace a vehicle among that population is $19,000. So in this hypothetical scenario the one asshole who owns the exotic car is nearly doubling the insurance cost for this population set.

kcplate 3y ago
> If you have 9 cars that cost $10,000 to replace and one car that costs $100,000 to replace, that means your average cost to replace a vehicle among that population is $19,000. Except that replacement average is only meaningful and the $100k exotic car an asshole if the rate is the same among all 9 drivers to insure all of those cars and the risk pool among all 9 drivers is identical. A $10k car driven 60k miles a year by a 17 year old male, owns potentially a larger slice of that $19k average then the $100k car if it’s driven 500 miles a year by a 55 year old woman. This is why insurance companies employ actuaries because it’s a tad more complex to calculate policy risk than adding up all insured values and dividing by the number of the insured.
- dangus 3y ago
  I’m fully aware that my math is more crude than the real thing, it’s just there to illustrate the concept. I didn’t factor in the risk factor of the driver profiles because it’s nearly irrelevant to the discussion, since the discussion is surrounding the plain existence of an expensive car on the road versus not being on the road, all else being equal. It doesn’t really matter whether the owner or the expensive car is a perfect driver because the scenario under discussion is whether I need car insurance that covers high value damage to other people’s vehicles. If that super responsible wealthy person owned a less expensive car, the total amount of dollars paid out by insurance companies still decreases. In other words, if my insurance company knew for a fact that nobody on the road drove a car worth more than $10k, my rate would be lower, if only slightly. In your scenario where low value vehicle drivers are less responsible, it actually bolsters my point because those owners need to insure against being at-fault in crashes with the “more responsible and sophisticated wealthy vehicle owner.”