Feb

Insurance Industry Poised to Join the War on Horsepower

Posted by admin Published in Auto Insurance

“AutoWeek’s” Dutch Mandel recounts the grim tale of an 18 year old who wraps his BMW M5 around a tree at triple-digit speeds, killing himself and four others in the car. The driver, Josh Ammirato, had taken possession of his 500 hp, V-10 vehicle two weeks before. Hours before the accident, he’d been surfing the Web for ways to drive it faster.

It’s a tragedy that raises an unsettling question: Where does responsibility lie? Some would ask, what was an 18 year old doing with 500 horses? Others would ask, what is anyone doing with 500 horses? A new study from the Insurance Institute for Highway Safety shows that not only has the horsepower race turned the U.S. into a nation of law breakers, but the costs are punishing all of us in higher insurance premiums.

Granted, the free market discriminates accordingly. You will pay higher premiums for a high-performance car. But as Joseph B. White points out in the

online edition of the “Wall Street Journal,” the cost differential doesn’t reflect that losses for all cars have been rising since 1985, roughly the beginning of the current horsepower race. In 1981, a Honda Accord had 75 horses. nowadays it has 177. Legislating caps in horsepower isn’t in the works–not even in the lobbying efforts from the insurance industry. The good news in the report is that speeding cameras seem to be effective. The IIHS showed that speeds dropped some 15 percent in Scottsdale, AZ., when cameras were installed to issue speeding tickets. Of course, cameras raise other civil rights concerns. But whether they save lives and keep a lid on everyone’s insurance premiums, they’re a small price to pay for keeping your Porsche 911.

Sources: AutoWeek, Wall Street Journal, IIHS