A bit related: In the early aughts we bought a Porsche 911, which had a ridiculously tiny back seat. According to the dealer, it existed because two-seaters were considered sports cars and were therefore costlier to ensure.
Worked out perfectly for us because our children were young, we lived at the beach, and driving them to school on the freeway was an absolute blast.
Thanks for the treatise. Love the research and I agree with your very close reasoning.
In my defense, I attributed it to the dealer instead of stating it as undisputed fact because it has always sounded a little funky to me. On the other hand, the seat is so small there isn’t any obvious reason for its existence.
The subject was interesting to me but not interesting enough to pursue it much further because I was going to get the car anyway.
I highly doubt actuaries are dumb enough to allow this arbitrage at the insurance company’s expense.
Remember that there are also insurance regulators that must be satisfied. It might not be worth fighting them on something like this.
That makes it even more suspect. Regulators are incentivized to ensure prices are proportional to the risk. They would have nothing to gain by asking insurers to have all other drivers subsidize sports car drivers just because it has more than 2 seats (if that is even a true scenario).
That sounds like some sort of urban legend that originates from people repeating what other people think they know about how insurance works... like the long debunked "red cars cost more to insure".
It really doesn't pass the sniff test, because insurers don't need to know how many seats a car has to determine whether or not a vehicle is a sports car. The make and model is sufficient to determine this. Insurers already have a list of all known mass produced vehicles and their attributes.
Also, most insurers don't rate "sports cars" as more expensive than other cars, outright, because sports cars are not overall actually riskier to insure than non-sports cars. The risk of the driver matters quite a bit more than the car. If you look at IIHS loss data, you'll find that cheap vehicles marketed to subprime markets often have higher liability loss rates than untrendy sports cars marketed to old men.
e.g. Late model Porsche 911s and Corvettes have long topped the least risky in terms of property damage liability according to IIHS data. Why? My guess is that the only people buying these vehicles new are rich old dudes who drive them carefully on Sundays and pay attention while doing so. But despite also being a similarly powerful car, the Dodge Charger Hellcat is one of the most risky. But it appeals to a very different crowd.