Until death do you part...

Insurance companies ask a lot of questions while going through an application.  Some of them obvious, some of them not so much.  I saw this question come through twitter and thought I'd take a few paragraphs to hash this one out.

@Jodie_Roberts: Why do car insurance companies need to know your marital status?

This question is necessary for many reasons.  First, marital status makes a difference in the rate you qualify for.  Maried couples receive better rates than single folks.  This is due to a variety of reasons.  Married couples drive less than single folks.  Think about it.  If there's 2 drivers in a house, husband and wife, chances are there's only one trip to the grocery store each week and one car out running errands on the weekends.  Conversely, a house with two roomates tend to make more separate trips.  By virtue of bringing down the number of road miles, the possibility of a claim dips as well.

Secondly, marital status makes a difference because of how claims are paid out.  Liability on a car insurance policy does not pay for injuries to household resident relatives.  So let's take an example.  If the husband is driving and causes an accident in which his wife, as a passenger, is injured, the liability coverage on the policy will not pay for the wife's injuries because she is a household resident relative.  Sinsce liability coverage is designed to protect you from being sued by the not at fault party, it will not cover injuries to your spouse because spouses cannot sue each other.

Now think about this example, but instead of a married couple.  It's an engaged couple that lives together.  If one driver causes and accident and injures the other person.  The passenger can sue the driver because the marital status does not prevent them.  So with this being known, married couples are not going to file a claim for this type of loss because they can't.  Henceforth the rate they are offered is lower than just two people living together, because the possibility of a claim is lower.

There are plenty of other things in insurance that work in a similar matter.  If you questions on any of them please contact me.