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Not so fast. What if a moose or a deer hits the car?
by cygwin98 14y ago
Not so fast. What if a moose or a deer hits the car?
- sv123 14y agoIf things like that are all insurance is used for then it should be about 1/100th of the current cost I guess.
- MPSimmons 14y ago>it SHOULD be about 1/100th of the current cost Yes, it should be. However do you think that insurance companies are going to allow that? They'll form the insurance-equivalent of the RIAA before that happens.
- SoftwareMaven 14y agoI highly doubt that. Insurance companies don't represent a "precious resource" (aka celebrities), so it would be easy for somebody to come in underneath them. Besides, insurance companies make money on the difference between rates and claims. If claims fall significantly, rates can, too, yet the insurance companies can still take home the same sized paycheck.
- learc83 14y agoI agree that it will market forces will drastically lower the price, but if the margins stay the same the insurance companies will still make less money as the overall premiums will be smaller.
- brc 14y ago>insurance companies make money on the difference between rates and claims. This isn't true, but is a common misconception. Insurance companies make money by earning an investment income on the retained premium (the premium earnt between when a policy is paid for, and a claim is paid out). You can easily see this by reading analyst reports on publicly-listed insurance companies, which will analyse in detail the return on the retained premium. An insurance company collecting more premium than claim costs is overpricing itself. An insurance company paying out more claims than premium is underpricing itself. The idea is that the risk is managed through actuarial study, so the premium/claim payout is managed, giving an optimal time lag between collected premium and paid out claims. The ability of insurance companies to create a very large pool of investment funds is why Warren Buffet buys them. He is an expert at investing, and the premium pool gives him the size he needs.
- krschultz 14y agoYou can figure it out when you look at the cost of your insurance. It depends on what you pick for coverage and what car you are driving, but for me roughly 50% of my bill goes to liability and 50% goes to comprehensive coverage. In a world with self driving cars, your liability wouldn't be 0 but it would be lower. The 50% that goes to comprehensive coverage would remain. That covers theft, falling trees, flooding, fires, etc.
- Someone 14y agoThat 50% will not go completely away. The total cost of liability insurance will only drop insofar as driving gets safer. You may not be responsible for hitting that other car, but someone will have to pay. Because of that, you likely wil have to pay a premium on top of the 'real' costs of such a car to the seller of the electronics, either as a lump sum, or as a per year and/or kilometer contribution.
- vectorbunny 14y agoThis assumes the cost of auto insurance is based on actuarial science, as opposed to whatever the industry lobby can get through state legislatures.
- shardling 14y agoMandatory insurance exists in case you hit someone else.