Homeownership is often used as a factor in determining risk when setting auto insurance premiums. Even though the two are not directly related, there is an assumption that homeownership implies a higher level of responsible actions (assuming you pay your mortgage on time) and therefore that you pose a lower risk in other endeavors – including your driving habits.
Insurance.com undertook a survey to see if homeownership does indeed correlate to safer driving habits, as measured through the total number of claims filed. Over 2-1/2 years' time from 2012 to mid-2014, online questionnaires from 700,000 respondents were collected and analyzed by age group, home state, and homeownership status.
The results do show some correlation between homeownership and fewer filed claims, although the reasons why are highly debatable. The survey does not attempt to address an underlying cause for these results, but it is worth noting that the age of the driver seems to play a consistent role. Perhaps the survey is picking up remnants of generally riskier behavior at younger ages.
When age is taken into account the discrepancy between renters, homeowners, and those still at home with their parents is largest among 18 to 24-year-old drivers. Those who lived with their parents filed auto insurance claims at a 24.4% rate, compared to 19.7% of those who rented and 17.6% of those who owned homes. This does seem to make sense, since there should be far fewer homeowners at that earlier age, and those who do own homes that early in life likely had to exhibit highly responsible behavior to be able to afford them.
The effect smoothes out over time, but the same order remains up to retirement. For example, in the 45-54 age group, the numbers of claim-filers were 15.2% for those living with parents, 14.1% for renters, and 13.4% for those owning homes. For ages 65-99, the numbers were equal for renters and homeowners at 14%. Only 11% of those aged 65-99 and living with their parents filed an auto insurance claim – but how many of the 700,000 respondents could possibly fall into that category?
There really doesn’t seem to be much of a geographical effect. In general, renters filed more claims than homeowners did, and the five highest discrepancies were in diverse states (Nebraska, Oregon, Maryland, South Carolina, and Utah). Four states found that homeowners filed more auto claims than renters did (Indiana, Oklahoma, Michigan, and Louisiana).
The managing editor of Insurance.com, Des Toups, suggests that the related income and stability of homeowners may play a role, but adds, “we can’t look at this data and claim that to be true.”
It would have been interesting to see the correlation using responsible homeownership and renting – in other words, weeding out respondents with multiple missed payments, foreclosures, or other red flags in the housing history – but that was beyond the scope of this particular survey.
Given some evidence of a correlation, insurance companies are not likely to change their beliefs on homeownership and driving risk assessment anytime soon – although they may make some minor adjustments based on localized data.
This could well be a spurious correlation that makes enough intuitive sense that nobody questions it, yet it could be like the infamous correlation between the number of people who drown annually by falling into swimming pools and the number of films that Nicolas Cage appears in during that same year. Homeownership does not always imply responsible behavior in other areas of life…and Nicolas Cage is not that bad of an actor.