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An Analysis of the Determinants of the Demand for Automobile Insurance
William A. Sherden
The Journal of Risk and Insurance
Vol. 51, No. 1 (Mar., 1984), pp. 49-62
Published by: American Risk and Insurance Association
Stable URL: http://www.jstor.org/stable/252800
Page Count: 14
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This article examines the effect of price, income, and perceived risk on the demand for three major automobile insurance coverages: bodily injury, comprehensive, and collision. The research approach involved a cross-sectional analysis of insurance consumption patterns in the 359 towns and cities in the state of Massachusetts in 1979. The major findings were that the demand for the three coverages was generally inelastic with respect to price and income, that the demand for comprehensive and collision coverages was price-elastic at prices 1.6 times the state average price, and that the demand for comprehensive and collision coverages increased substantially from areas of low density to areas of moderate density.
The Journal of Risk and Insurance © 1984 American Risk and Insurance Association