WalletHub: Cheapest Car Insurance in New Jersey

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WalletHub: Cheapest Car Insurance in New Jersey

Wednesday, July 31, 2024
toy car and insurance document

Ask the Experts

William Klinger

Professor of Business, Raritan Valley Community College

Is it fair for car insurance companies to consider gender or age when setting premiums?

All companies consider their costs when setting prices. In addition to the typical costs of a business, insurance companies also need to consider the risk they take that they may have to pay in the event of an accident. That risk is a cost, and it differs by age and gender. Insurance companies have statistics based upon millions of drivers that identify the risk of an accident for different ages and genders. It then makes sense to charge different premiums based on that risk.

Is it fair for car insurance companies to consider a driver’s occupation when setting premiums?

When setting premiums, insurance companies need to assess the risk they take that an individual may be involved in an accident. All of us require a greater return for taking greater risk and insurance companies are no different. Occupations where the individual drives more than others, such as ride sharing, are at greater risk for an accident. It may even make sense to consider occupations where it can be shown statistically that people in those occupations have more or fewer accidents.

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