Answer to Question #319299 in Finance for Kelsey Jand

Question

Auto Insurance and the Black Box

The chapter talks about the lack of information regarding insurance. I found an article about installing a box from your auto insurance company that monitors your driving. The idea is, if you drive less or if you are a safe driver the insurance company will reduce your insurance premiums. In fact, in most cases the box may have been a prop, however, people still were driving safer.

Covid-19 has changed a lot of Americans driving habits. If you are no longer driving to work did your insurance company reduce your rates?

The article talks about how your insurance carrier can reduce rates based on how far you drive and how safe you drive.in some cases, the companies may give you an empty box without you knowing it and you will still modify your driving. What do you think about this and how would you tie it to the chapter? Do you believe these practices are good ways to reduce insurance rates?

Answer 1

Yes, the strategies are good ways of reducing insurance rates because safe driving or driving for fewer hours lowers the risk of causing accidents. According to the principles of insurance, the lower the risk, the lower the premiums (insurance rates).