Correlation does not equate to causation, however, if you’re a homeowner it counts favorably for you as a car insurance policyholder. When insurance companies calculate risk, people who own their homes are often determined to be more responsible than those who do not since it requires a certain level of commitment, reliability, and financial stability. And though there are various studies that seem to indicate that there is some truth to this assumption, it’s still highly debatable.
Though not conclusive, there are many reports that insurance companies use as reference when citing that homeownership indicates more responsible drivers. These same studies demonstrate that renters tend to file more car insurance claims than homeowners do, indicating that they are more prone to getting into accidents or being involved in incidents that require car repair or medical aid. However, there are many considerations that aren’t taken into account. Among homeowners, there was not a distinction between those who were responsible homeowners or those who merely owned homes. Even if you own a home, you could be negligent and not make payments on time or have taken out a bigger loan that you should have. And most studies don’t take the current economic climate into consideration. For example, even if someone is financially responsible and stable, if they are not earning enough to justify the costs of a down payment and a monthly mortgage, they may choose to rent versus purchase a home of their own. Their location and the cost of living in that area may also play into their decision on whether or not to become a homeowner. Also, if owning a home is a good indication of financial stability and possibly more wealth than those who rent, it could also possibly mean that homeowners pay out-of-pocket for any expenses and bypass insurance by not filing claims.
When the study looked at age, it was reasonable to infer that those who were in the youngest group with the smallest group of homeowners had to practice highly responsible behavior and make wise financial decisions in order to afford a home at that stage in life. Thus, this would most likely spill over into other areas of their lives including safer driving and being less reckless.
Besides homeownership, some factors that car insurance companies may look at to determine risk are:
- Good Student / Performance in School
- Credit Score
- Previous driving history
- Certification / Lessons
Another reason why insurance companies favor the combination of homeownership and drivers is because they qualify for a multi-coverage insurance policy. They can bundle homeowner insurance and car insurance for savings on both.
Ultimately, for either car insurance or homeowner insurance, the insurance companies want to assume as little risk as possible. They base their risk assessment off of studies and stats that help them project how much a person will cost them if there is a file claimed. For those who have a higher risk of costing them money, the policy will cost more. If the risk is low, then the insurance company can pass on the savings to the homeowner or driver. Though homeownership is not the only or biggest factor in determining risk and responsibility as a driver, it does affect the policy. Since buying a home is one of the biggest purchases, it can count as a significant indicator of strong finances and solid long-term decision making.