Question

Arnold is 26 years old and lives in a small town. Paulette is 28 years old and lives in a large city. Both drive similar 3-year-old modestly priced cars. Both have auto insurance with 25/50/20 split coverage Neither has been in an accident, but Paulette has received three speeding tickets over the past year Arnold took a defensive driving course 6 months ago Paulette insures her car and apartment with the same company; Arnold only insures his car Arnold’s credit score is higher than Paulette’s credit score Who is likely to pay more in Auto Premiums on an annual basis? Why?

Answer 1

Paulette is more likely to pay higher auto premiums because of the 3 major factors mentioned below:

1. Paulett has received 3 speeding tickets: Speeding tickets are considered a part of your driving records. Insurance companies check your driving records to know the possibility of you causing an accident.

2. Arnold took a defensive driving course: This will improve Arnold's driving record. Defensive driving course helps a person get 2 - 10% discount on auro insurance.

3. Arnold's credit score is higher than Paulette's credit score: It is believed those with lower credit scores tended to incur more car insurance losses and higher claims payout, and thus posed greater risk to auto insurers.

All these factors make Arnold a better suited candidate for an auto insurer as there are less chances of him involing in an accident. So, he is likely to get the insurance at lower premiums.