Replacement Cost Endorsement and Opportunistic Fraud in Automobile Insurance

Georges Dionne () and Robert Gagné ()
Additional contact information
Robert Gagné: Institut d'économie appliquée, HEC Montréal

No 00-1, Working Papers from HEC Montreal, Canada Research Chair in Risk Management

Abstract: Traditional insurance contracts do not offer protection against the replacement value of a vehicle. A replacement cost endorsement gives the opportunity to get a new vehicle in the case of a total theft or in the case of total destruction of the car in a road accident. This type of protection was introduced in Canada in the late 1980's. It is also offered in France and many insurers in the United States are going to move in that direction. We show that holders of car insurance policies with a replacement cost endorsement have a higher probability of theft near the end of this additional protection (usually 24 months following the acquisition of a new car). Our tests indicate that this result is a form of ex-post moral hazard or opportunistic insurance fraud.

Keywords: Replacement cost endorsement; automobile insurance; ex-post moral hazard; insurance fraud (search for similar items in EconPapers)
JEL-codes: D81 G14 G22 M40 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2000-02-01
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.risksresearch.com/_files/ugd/a6eed3_40 ... 913d0d022a2ddfbf.pdf Full text (application/pdf)

Related works:
Journal Article: Replacement Cost Endorsement and Opportunistic Fraud in Automobile Insurance (2002)
Working Paper: Replacement Cost Endorsement and Opportunistic Fraud in Automobile Insurance (2000)
Working Paper: Replacement Cost Endorsement and Opportunitic Fraud in Automobile Insurance (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:crcrmw:2000_001

Access Statistics for this paper

More papers in Working Papers from HEC Montreal, Canada Research Chair in Risk Management Contact information at EDIRC.
Bibliographic data for series maintained by Claire Boisvert ().