A Statistical Model for the Costs of Passenger Car Traffic Accidents

The total costs of damage caused by passenger car traffic accidents per distance interval of an individual motorist can be split into two components: the number of accidents which occur to the motorist, and the amount of damage associated with these accidents. In our study we present a probability model for the number of accidents of an individual motorist. We also discuss models, on empirical results, for the amount of damage. The integration of both models results in a general model for the costs of damage. From this general model we derive a model for the costs of indemnity to be paid by car insurance companies. The models are applied to Dutch car insurance data.