Auto Insurance That Auto Insurance That Breaks The BankBreaks The Bank

Why do young people pay more for insurance? T.J.

Thesis

Young adolescence under the age of twenty-five are discriminated against when purchasing auto insurance. Young males are stereotyped into one main category…HIGH RISK thus the high insurance rates.IS IT FAIR?

Justification

I chose this as a topic, because as a recent purchaser of auto insurance I know first hand how expensive insurance is.I as well as many others feel outraged about this ongoing problem!I want to understand why young teens insurance rates are so high.

Comparing Cost

Insurance price comparisons between provinces are difficult to make because of the differences in insurance legislation, highway and traffic legislation, traffic density, traffic enforcement, urban/rural ratios, and average annual mileage driven. Comparisons are rarely made between Thunder Bay, Toronto, and Peterborough for similar reasons. Comparisons made between provinces only increase the number and scope of these factors. http://www.ibc.ca/home_on_private.asp

Cost Factors

What type of car do you drive?How much will it cost to repair or replace your car in case of a total loss does have an influence on the premium you are expected to pay. The more expensive cars are usually more expensive to insure.

Where do you live? Because collisions are more likely to happen where there is a high volume of traffic, people who live in a urban area are more likely to be involved in a collision (70% of all collisions occur in urban zones)

Cost Factors Continued

How is your driving record? Drivers who have demonstrated poor driving behaviour by “collecting” moving violations (speeding, dangerous driving fines) are also more likely to be involved in a collision and the premiums reflects the added risk factor.

Cost Of Repairing or Replacing Vehicles

In the past 10 years, the cost of repairing a car has risen almost 8%, while the cost of replacing vehicles damaged in car accidents is up by more than 30%.

                

Insurance companies suggest this is a large factor in calculating the cost of auto insurance.

Drivers Education Can vs On.

Source: Statistics Canada, CANSIM, table 203-0007

Insurance Comparison #1

Sample A

18 years old

with driver's education

owns a 1995 Honda Civic 4 door

clean record, no tickets

Insurance cost per year: $6,376

Sample B

18 years old

with driver's education

owns a 1995 Honda Civic 4 door

clean record, no tickets

Insurance cost per year: $3,356

Both cases below were calculated with the same information and location of residence. (Toronto, On.)

$6376.00 - $3356.00 = $3020.00

Insurance Comparison #2

17 year old maleDriver educationClean record, no ticketsResiding in Eganville, On.Using parents insurance company (discount allotted)

Costs with Collision

1998 Dodge Ram - $32331998 Chrysler Neon - $37561997 Chev Cavalier (4d) - $36411999 Vw Beetle GLS - $3412

Collision costs approximately between 900-1100 dollars depending on the vehicle

The mean cost including collision for this male is aprox. $ 3510.50

Teen Driving Stats

More males are in auto accidents than females

female teen death rates in automobiles are higher than older females

16 and 17 year olds are viewed as high risk drivers

After 10:00pm & 6:00am are the leading times for teen accidents

Reported Crashes By Age

The data is rightSkewed, which tells us that youngerDrivers have a higher crash rating.

Official Crash Rates

The data is leftskewed, which tells us that youngerdrivers on averagetravel with a greatnumber of passengers in a vehicle.

Time & Speed Cities that have imposed

curfews on teenagers have seen total crashes reduced by 23 percent.

87% of teens admit to speeding

A Recent Survey

According to the 2003 Liberty Mutual/SADD Teen Driving surveyMore Driving – Teen drivers average 44 percent more hours behind the wheel each week during the summer (23.6 hours) than during the school year (16.4 hours). “Piling-In” – 23 percent of teen drivers are more likely to drive with three or more teens in the car in the summer, compared to 6 percent of teen drivers who are more likely to do so during the school year; Later Nights – 72 percent of all teens report they stay out later during the summer than the school year. Additionally, 47 percent of teen drivers are more likely to drive late at night during the summer, compared to 6 percent of teen drivers who are more likely to drive late at night during the school year; and, Heavy Eyelids – 24 percent of teen drivers are more likely to drive when tired or sleepy during the summer, compared to 9 percent of teen drivers who are more likely to drive fatigued during the school year.

SADD Statistics

•62 percent of high school drivers say they talk on a cell phone while driving, and approximately half of both high school teens who don’t yet drive (52 percent) and middle school students (47 percent) say they will.

•67 percent of high school drivers say they speed. Interestingly, most high school teens who don’t yet drive (65 percent) and middle school students (79 percent) say they won’t.

•33 percent of high school drivers say they don’t wear their safety belts. High school teens who don’t yet drive (28 percent) and middle school students (20 percent) are less likely to say they won’t.

SADD Statistics Cont…

• Nine out of ten (89 percent) teens consider themselves "safe" drivers. Yet, many teens don’t consider risky behaviours dangerous:

27 percent of all high school students and 33 percent of middle school students think speeding is safe

25 percent of all high school students and 29 percent of middle school students think driving without a safety belt is safe

24 percent of all high school students and 32 percent of middle school students think driving while talking on a cell phone is safe

Premiums & Claim Across Canada

                                                                                         

         

My Survey Results

Did you take drivers ed?

0

10

20

30

40

yes no

# o

f re

sp

on

de

nce

•Survey conducted within Opeongo•Sample of 40 students from grades 11 & 12•20 females•20 males

77.5% responded “yes”

22.5% responded “no”

My Survey Results Cont..

Do you drive?

yes no

Do you own your own car?

yes no

90% of students drive

17.5% of the students own there own car.

Survey Results Cont…

0

20

40# of

respondence

yes no

Do you plan to purchase a vehicle in the next 12 months?

20% responded “yes”80% responded “no”

15% pay their own insurance

0

20

40

# of respondence

yes no

Do you pay your own insurance?

Accidents By Age

Mean Of Accident Ages

Mean of Grouped Data:

Σ(F*M)___________________________

Σ F

(207090177+263465000+253935000+164220000+103555000)____________________________________________________________________________________________________________________________________________________________________

(7020006+6670000+5130000+2760000+1490000)

=43.0110498

The average age of a driver being in an accident is 43.

Continuation From Previous Slide

Continued on nest page ->

Mode Age In Accidents

25-34 Age group is the mode age

The data suggest that anyone can be in an accident, but ages 25+ show greater risk. The mean suggest it is the person who drives longer, is in the greatest number of accidents. A possible connection to careless habits.

What Are Your Chances?

The probability that less than or equal to 180 students out of 500 in our school will be in an accident is:

42.86%P= 0.38Q=1-0.38=0.62N=500K= less or equal to 180

(found using probability formula)

SEX OF DRIVERS INVOLVED IN ALL CRASHES

ma

le

10000000

12000000

14000000

16000000

18000000

year1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

female

7000000 8000000 9000000 10000000 11000000 12000000 13000000

male = 413200year - 812100000; r^2 = 0.24female male correlation = 0.983148

10000000130000001600000019000000

Re

sid

ua

l

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002year

crashes_male_female Scatter Plot

Theft Claims 2000-2002

                                                                                     

Theft Claim Cost 2000-2002

                                                                                     

Take Action To Lower Insurance Rates

Raise your deductible

Combine home & car insurance and insure more than one car with the same company

Your insurance company may offer a discount for installationof an anti-theft system

Make your next car one with a lower-cost insurance rating

Analysis

My research has shown that male drivers have high insurance do to high crash and fatality numbersInsurance companies view young males as “high risk drivers” who cause high speed fatal crashesFemales are viewed as “high risk” but it is suggested that they only have small fender benders (non fatal crashes) Statistics are used to calculate insurance rates, which penalizes the “good drivers” (the stats are against young drivers)Insurance costs also depend on your address and driving recordYoung males insurance is usually between 25-50% greater costs than the same aged femaleIt may not be fair, but insurance companies calculate all insurance the same way.

Finale Statement

Sources

www.statcan.cahttp://www.cbc.ca/streetcents/archives/guide/2002/09/s04_02.htmlhttp://www.ibc.ca/home_on_private.asphttp://www.drivehomesafe.com/teen_driving_fatality_data_and_resources.htmhttp://www.safeco.com/safeco/planning/tips/teen.asphttp://www.libertymutual.com/personal/teen/teen_speeding2.htmlhttp://www.libertymutual.com/omapps/ContentServer?cid=1058288904684&pagename=PMInternet%2FPage%2FPMTertiaryCorporateBlue&c=Pagehttp://www.iii.org/media/facts/statsbyissue/highway/

Finale

Thank you to the forty students who completed my survey!