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I was messing around with my car insurance policy to see if I could get my premium to go down a little bit, so I was just curious; How much is my wife making my premium go up?

As it stood, my premium was at about $425/6 months, so I removed my wife..... Guess what happened? It went up to $550/6 months. Why is that? Do insurance companies think I'll be more foolish if I don't have a wife? Could it be beneficial to insure another person with a perfect record? Could that make your premium go down?

  • 1
    How old are you? Actuarially, a 25-year-old married person is a lot less risky to insure than a 25-year-old single person, and so the premium is smaller. – Dilip Sarwate May 1 '14 at 22:27
  • Maybe your wife is a better driver than you? – Sean Dec 19 '18 at 4:26
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Source: I worked as an IT consultant for a major US multi-line insurance company, working on policy rating - Property and Casualty.

A few notes:

  • You can't simply remove your wife if she ever drives; she needs to be insured. She may need to be insured if she doesn't drive, but has a driver's license. She will be if she's a named owner of any of the vehicles listed on your policy. (Varies by State)
  • "Do insurance companies think I'll be more foolish if I don't have a wife?" - Yes... Yes, they do. And they have statistics to back it up.
  • Women are statistically less likely to get into accidents, so companies charge a lower premium
  • "Could it be beneficial to insure another person with a perfect record? Could that make your premium go down?" - In general, adding more people means adding more liabilities. Marital status, gender, and age happen to be a major calculating factors in policy premiums.

Somewhat Off-Topic, but Major Note about Insurance Policies

  • Insurance company base rates are not actually controlled by the company, they're controlled/approved by the state's Department of Insurance (DOI)
  • Insurance companies submit specs to the DOI for their proposal for a base rating structure for insurance policies in that state.
  • The Department will either accept (unlikely) or reject with suggested revisions. Rinse/repeat 4-12 times until the proposal is finally accepted.
  • It's important to note that because of this process, and the difference in employees at the DOI, every company that can issue policies in a state are operating with a slightly (or drastically) different set of rating rules.
  • Aside from the base rate, the insurance company may charge modifiers, and slowly lower them over time (under the guise of a loyalty discount). So your additional markup may start at 15%, then slowly lower to a 7% markup.
  • A mathematically-adept underwriter will then use a set of rough guidelines for how they want to rate any policy quote coming in.

To address the root of the issue

If you want to get a lower insurance premium ($425 semi-annually isn't that bad, by the way), get an independent insurance agent, and ask for 3 to 5 quotes for car insurance (selecting your coverage and options). Independent insurance agents aren't tied to any single company, and if you ask for multiple quotes, you know they're providing you with actual insurance data (rather than just an email summary). If you're able to get a lower premium, your insurance agent will be able to find it.

If you find one that's about the same, you may want to consider having a cancellation letter drafted, and call your current insurance company, notifying them of your intent to cancel because you found better coverage elsewhere. They will usually max out your discount modifiers (as allowed by the state) to keep you, particularly if you have a good driving record.

WARNING: Don't do this unless you're prepared to actually cancel your account and switch. Some companies don't care, and would rather push the 'risk' on to somebody else. I lowered my premium from $698/6mo to $440/6mo like this (felt bad for my insurance agent, though, he lost his commission).

P.S. Insurance agents don't cost you any money. They get a commission from the insurance company (a sort of "finder's fee") that insurance companies aren't allowed to bill you for.

  • Wow, that was huge. I'm sorry – Noah May 3 '14 at 5:25
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    Nice answer. Just a question (not a challenge) all base rates are filed? My understanding that some rates are filed, but others are completely up to the insurer. – MrChrister May 3 '14 at 23:55
  • Depending on the state. DOI for most states give underwriters a LOT of leeway (+/- 35% modifiers), so they can make adjustments as necessary. New York has a limit of +/- 15%. The insurer submits the request to the DOI, so they essentially do control it, but they're all subject to approval (State-specific approvals are why companies like GEICO will note that they offer HUNDREDS of discounts, like a DRL discount, but then note that it's only available in 3 states) – Noah May 4 '14 at 0:33
  • Follow-up: On some items, the state doesn't care. They'll let the company submit whatever they want. And sometimes, insurance companies will write outside of state compliance and hope they don't get audited. Sr. Underwriters take the heat for it if they get caught. It's almost always a noncompliance fine, and it's usually worth the risk (like if they write a policy with a premium that's too low in order to keep a customer) – Noah May 4 '14 at 0:45
  • The third point seems like a fallacy in this particular case. It does not seem obvious that OP's wife being permitted to drive his car would reduce the amount that he drives, so the 'total incurred risk' for want of a better term would not decrease due to OP's wife's supposedly safer driving habits. – Tom W Jun 17 '16 at 22:26
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I am going to start with the assumption that actuaries are more scientist that moral guide post.

Yes. The insurance companies thinks you are less risky as a married person. They are completely convinced your behavior is more risky as a single person. The proof is in the lower premium. As to why? I will have to assume they are statistics and data that show a clear trend.

Luckily in the US, car insurance is a very competitive market, and therefore price is managed as closely as it can be by Insurance underwriters. To balance the need for profit and the importance of low price, data is a big deal. Data is a key asset for insurance companies.

Did you know that airbags and seat belts in cars (and lots of safety features) are in no small part to insurance companies getting laws passed to make the vehicle safer? Do you think the corporate people at BigCo Insurance are really concerned about you, or their profit? Safer cars means fewer payouts. Data told them that seat belts save lives and saving lives is good for the bottom line in the insurance industry.

p.s. No, you can't just add somebody else to your policy and get the same discount, if that other person isn't your spouse, they will know and the same discount won't apply.

(I assume that last point, I don't have access to insurance industry data.)

  • 2
    Another factor may be that they assume, with two insured drivers, your wife will be driving at least part of the time. She may be classed as less likely to get into an accident based on her gender and age. – ChrisInEdmonton May 1 '14 at 20:38
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    @ChrisInEdmonton's comment seems more to the point, actually. The OP said that he tried removing his wife from the policy, not that he tried removing his wife from the policy and switching his status to "unmarried". – dg99 May 2 '14 at 17:05
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    @dg99 - if the question is why the answer is still because their data says it is more risky. The proprietary data analysis all the companies do gives them models to set prices. They don't do it on a whim, and they aren't changing prices for any reason other than stats. ChrisInEdmonston is very smart and probably correct, but if we get into those kinds of details it will be either too specific or unanswerable as conjecture only. My point is that the price model is so very complex breaking it down on one data point is futile. – MrChrister May 2 '14 at 17:11
  • Whoa there, tiger. I thought your answer was fine. I just wanted to direct the OP's attention to the more precise point in Chris's answer. – dg99 May 2 '14 at 17:56
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    I'm not quite convinced that safety belts reduce the costs. They surely safe lives, but lives are cheap (car insurance wise). Hospitals are expensive, and there seems to be a significant rise in cases with horrendous leg damage which is very expensive, but people survived because of seat belt and airbag. – gnasher729 Jul 8 '14 at 10:21
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Maybe you have more points, accidents, and or past claims. Maybe her driving record is impeccable, and or been driving longer than you. Switch it around, use her as the primary and leave yourself out of the policy. Most states allow you to be a driver in any insured vehicle, so even if your not on the policy, you'll be covered in case of an accident. Pro your policy would be low, or lower. Con, you're not on the policy. It really depends on the insurance company, but worth asking.

protected by Chris W. Rea Nov 5 '17 at 22:05

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