Lindsay Lohan Offers Lessons in Auto Insurance

Risky Behavior Affects Coverage for Movie Productions, Too

In all the commotion of Lindsay Lohan’s fall from grace, little attention has been paid to the impact her risky behavior will have on her insurance – auto, home, life, health, and even movie productions. But consumers can learn from her mistakes, according to the Insurance Information Network of California.

Using Lohan’s profile, ZIP code, vehicle model and current record of two DUIs and an at-fault car accident, IINC determined the average insurance premium difference she could pay for automobile insurance because of her risky behavior.

A single, 24-year-old female who lives in Beverly Hills ZIP code of 90210 (she lives in a condo in West Hollywood) and drives a 2009 Mercedes SL550 convertible would have access to 100 percent of the insurers offering auto coverage in California, IINC said. With a clean driving record, Lohan would pay approximately $2,075 every six months for a full coverage policy. But because of the at-fault accident and two DUIs on her driving record, the six-month premium jumps to $7,408.90. Worse yet, she would only have access to less than 10 percent of the companies in California offering auto coverage because most of the major insurers in the state would not want to insure her. Instead, she would probably have to purchase coverage for bad drivers through the Department of Insurance, IINC said.

Furthermore, her risky behavior also could affect the premium she would pay for life insurance, as some life insurers will pull a DMV record when determining a customer’s premium, the association indicated.

“Before we initially did the analysis, we thought her insurance would double,” said Pete Moraga, communications specialist for IINC. But, the increase in her premium because of her driving record is 350 percent more because she made some bad choices, compared to if she had a clean driving record.

Additionally, movies in which Lohan has a role might pay extra money to get her insured, Moraga said, noting cast insurance and completion bonds might be more costly if Lohan is a principal actor.

While cast coverage will only provide coverage in the event of the actor’s death or disability, the completion bond company will want to know if the actor has a history of causing shooting/production delays that aren’t related to illness or disability, according to Steven Mangel, president and CEO of International Film Guarantors, a subsidiary of Fireman’s Fund.

“There are many variables when underwriting the production insurance for a film. You have to consider the factors that may make one actor ‘riskier’ than another,” he said. “For example, what is the actor’s age, the actor’s health, is there any history of illness, disability or incapacity? Then, you must consider the actor’s role in this particular project. For example, how long is a particular actor going to be filming: three days or three months? Will the movie be shot on a sound stage near the actor’s home or in a foreign location? Is the role physically strenuous or will the actor be sitting down most of the time? If the role is a relatively simple, short one, then the risk goes down. If it’s a longer, more strenuous shoot in another country, the risk is much higher. We take into account all of these factors.”

The completion bond company will want to know whether there are any risks excluded under the actor’s cast coverage because those risks will be covered under the completion bond unless they are also excluded under the film’s completion bond, Mangel added. The bond company will also need to know whether any particular risks are covered, but possibly subject to payment of an increased premium, increased deductible or sublimit, because each of those may affect the guarantor’s risk under the completion guaranty.

“The big picture is that all of us can learn from her mistakes,” IINC’s Moraga said. “People don’t always understand that what they pay for insurance is based on their own risk profile and risky decisions we make in our daily lives will impact that cost.”

A DUI stays on a person’s driving record for 10 years, for instance.

So while Lohan might be able to afford paying nearly $15,000 for auto insurance, for the general public, it’s important to know that the decisions we make and risks we take will affect your pocketbooks, Moraga said. “If we take risks and make bad decisions, our insurance will be much more expensive.”