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Letter to Dallas Morning News
Published May 8, 2002
The report “Credit history boosts insurance premiums” (April 27) gives no reason for the correlation of auto insurance claims with credit. But households with credit problems tend to economize on premiums by selling one car and driving the other more. What credit history detects is a group that averages more miles and more claims per car. Thus, credit merely serves as a proxy odometer.

If insurers used real odometers as Texas law allows, households that need two cars could keep both but drive each fewer miles and get proportional savings. For how this would work, visit: www.centspermilenow.org .

Patrick Butler
CentsPerMileNow Project
National Organization for Women and Texas NOW, Austin

Letter to The Insurance Journal, Texas
Published May 13, 2002
In the review “Giving Credit Where Credit Is Due” (April 29), neither defenders nor opponents of credit pricing of automobile insurance offer any reason that is not moralistic for the correlation between credit record and number of claims per car year.

In fact, the correlation is merely the inevitable result of today’s crude practice of selling insurance by the car year. This practice strongly induces families with two cars and a need to economize to sacrifice one car and put all of their miles on the other.

Credit thus serves as a proxy odometer that “measures” the average effect of reducing car ownership to save on insurance.

Customers are right to be angry. As an artifact of car-year pricing and the strategies this pricing forces drivers to use, the credit correlation would disappear if insurers used real odometers as Texas law permits. To see how this works, visit: www.centspermilenow.org .

Patrick Butler, Director
CentsPerMileNow Insurance Project
National Organization for Women
Washington DC and Austin Texas

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