2020 Auto News Auto Sales USA automobiles

How Auto Insurers Subsidize Car Carnage

Here’s a startling fact that more Americans need to know: The auto-insurance industry is subsidizing road carnage. 

How’s that?

Insurance companies subsidize vehicle violence by charging far less to insure SUVs, pick-up trucks, and minivans — the hulking killing machines that have sent pedestrian and cyclist crash deaths soaring in the last decade — compared to smaller vehicles that aren’t as deadly for vulnerable road users, such as compacts and sedans.

And that’s not the only way: “Aggressive drivers” — those charged with violations such as failure to yield and stop, tailgating, street racing, hit and runs, and reckless driving — pay only 20 percent more on average than their safe counterparts ($1,564 annually, versus $1,208). 

That’s it?

Those are two key takeaways from “Insuring the American Driver: Trends in Costs and Coverage,” a new report out from Insurify, which bills itself as “the top-rated virtual insurance agent in America” and ”a valued source of data-driven trends, statistics, insights, and consumer education about” the industry.

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Per the report, the average annual cost to insure an American-made SUV is $1,369, a pick-up truck $1,297, and a minivan $1,097. Meanwhile, much-smaller sedans, coupes, or hatchbacks cost $1,558, $1,640, and $1,445, respectively, to insure annually. That makes the three larger kinds of vehicles about 19 percent cheaper to insure, in aggregate, than the three smaller ones.

That’s bad from the point of view of road safety, because larger cars have stoked a rising tide of road death — and anything that makes them cheaper to operate adds to the death toll. SUVs and pick-ups have come to dominate the U.S. market in the past decade or so — so much so that industry experts expect that they will make up 78 percent of sales by 2025, up from 72 percent now.

At the same time, pedestrian fatalities in this country have risen sharply, skyrocketing since 2009 after falling for the previous 20 years. Such deaths were estimated at 6,590 in 2019, the highest total since 1988, after falling to 4,109 at the 2009 trough. The Governor’s Highway Safety Association, among other groups, attributes the trend in large part to the growing popularity of SUVs and pickups. Driver distraction (think: cell phones and ever-bigger cockpit screens) is another factor.

American road-safety advocates have been trying to call attention to the vehicles’ outsized dangers — only to be rebuffed by indifferent regulators and manufacturers who are making money hand over fist. Studies have found that SUVs are 50 percent more likely to kill vulnerable road users in the event of a crash — in part because of their high front ends. American SUVs are so dangerous to people outside of them that the European Transport Safety Council this year called for banning the oversized vehicles from towns and cities. 

But from the insurers’ point of view, car insurance is not about promoting road safety; it’s about indemnifying the value of the automobile as property.

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