DRINKING, DRIVING, AND THE PRICE OF AUTOMOBILE INSURANCE

This study describes premium penalties imposed by insurers for drunk d riving and other chargeable accidents, assesses why variations in prem iums for drivers with clean records and adverse records differ across states and insurers, and determines the effect of imposing penalties o n persons convicted of drunk driving. There are significant difference s among insurers in treatment of violators, both in underwriting and i n premium setting-which are in part attributable to state policies, su ch as imposition of take-all-comer rules. Imposing premium surcharges for a charge of drunk driving has a significant deterrent effect on th e probability of drinking and driving.