The last time I looked, cigarettes caused about a third of residential fires. As far as I know, no insurance company offers a discount to non-smoking families on homeowner's insurance, thereby ignoring a very large risk differential.
More generally, why do insurance companies seem to be such careless underwriters (underwriting is the matching of premium to risk for particular policies or classes of insureds)? The insurance premium could be a really useful indicator of the risk of various behaviors (cf discussion of mileage-based insurance in WN).
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Actually, a lot of insurance companies offer discounts to non-smokers for house insurance. When my folks renewed their house insurance about 5 years ago, the insurance company asked if they smoked. They said all household members are non-smokers, which is true. And they got a discount on their insurance. This also came up several times over the last 10 years when I was looking for an apartment. One time when I was looking into an accessory apartment, the homeowners said they had non-smoking insurance on the house and therefore couldn't rent the apartment to a smoker.
Also, why not triple the tax on cigarettes, and use the money for something constructive, like... healthcare... education... balancing the budget...