Friday, November 27, 2009

Thousands don't have car insurance...

even though it's the law.

Why should they?

Think about it. Mandatory automobile insurance hurts the poor most.

States with higher poverty rates show a corresponding rise in uninsured drivers.... Simply put, people skirt car insurance when they can’t afford

Poor people can't afford it, so they don't buy it. Apparently mandatory auto insurance doesn't make the roads any safer, either.

Nearly 40 years of car insurance mandates — which the insurance industry says have failed to make roads safer or lower auto insurance costs — raise questions about how well such mandates work.

They don't work. Mandatory auto insurance benefits only the insurance industry, and possibly not even them. I'm not an actuary, so I don't know the answer to that one.

I have car insurance, because I own assets, including property. I can't afford to be sued. Poor people, however, don't have anything to lose.

If everyone didn't have to buy this expensive and totally useless product, those who do want it--like me--could purchase additional coverage for accidents involving uninsured drivers for a nominal sum. That's the way things used to be before mandatory car insurance was instituted.

Then the poor people could spend their money on something they need and want, like food, for instance.

Of course, they don't need mandatory health insurance either.


Xrlq said...

I think you're missing the point of mandatory liability insurance. The mandate isn't there to protect the individual driver; it's there to protect the rest of us from him. I don't want other people on the road who may hit me, and won't be able to pay if they do. Sure I can insure against that risk myself (and here in NC, I must) but why should I have to? We're talking about a risk the other guy created, not me. Especially since poverty isn't the only factor that causes some to forgo insurance. Another factor is general recklessness or worse, an existing driving record that makes the individual virtually uninsurable.

As to insurance to cover you against the risk of uninsured drivers, we have that now, and it is relatively cheap in most states. But a big part of the reason it's so cheap is that the vast majority of drivers on the road *are* insured, making the risk of any individual being hit by an uninsured one relatively slight. Remove the mandate, and there will be far more uninsured drivers on the road, and the cost of UM will increase significantly. And not just UM coverage, mind you; the relatively low price you pay for comp and collision also reflects the reality that most comp and collision claims, once paid, can be subrogated against a driver who is himself insured. Take away the mandate, and most comp and collision risk will be borne by your insurance alone.

Full disclosure: I work for an auto insurer but speak for myself, not for them.

miriam said...

I don't think the state should be reaching into my pocket to extract money to give to insurance companies. Mandatory insurance is an involuntary transfer of wealth, taking money from the poor to give to the wealthy.

I believe that Florida, at one point, did not mandate auto insurance for all, and it worked out just fine. Uninsured driver coverage cost pennies.

I have auto insurance because it's a rational choice for me, just as not smoking is a rational choice.

I quite smoking because the government proved that smoking is harmful to my health. Education, not coercion. Once the facts were out there, I decided it didn't make sense to smoke.

Get the facts out there, and let people make up their own minds.

Another irony in the situation: many times, people do not report non-serious accidents to their insurance companies but pay to repair the damage themselves because they fear rate increases.

Xrlq said...

"Get the facts out there, and let people make up their own minds" is a nice mantra but it simply doesn't apply here, or in any other situation where the risk is borne by society at large rather than by the individual himself. Driving without auto insurance is irresponsible, but not necessarily irrational. If you have no money, or a modest amount of money but a horrible driving record, it might make perfectly good sense for you to drive without insurance. That doesn't make you any less of a menace to society if you do. If Florida's little experiment in voluntary liability insurance worked so well, why did they see the need to change it? It's not as though insurance companies get to vote in elections.

miriam said...

Why did Florida change the law? Who knows? Why don't they build more roads so that commuting in Southern California is not a nightmare? Why do they institute a 55 mph speed limit that is useless? I've given up trying to make sense of anything our government, state or national, does.

I don't think Floridians suffered from poor people not having auto insurance. They probably changed the law out of "compassion."

Xrlq said...

You're wrong. It's not about "compassion," never has been. It's about protecting everyone else from reckless drivers who can't/won't pay for the harm that they cause others. Before auto insurance became mandatory, Floridians who had liability insurance, but not UM, suffered every time one of these reckless deadbeats hit them and the innocent, not at fault driver ended up holding the bag. Floridians who had UM suffered too, as they had to pay premiums to protect themselves against harm caused not by them but by others who were too cheap and too irresponsible to insure themselves (talk about a "transfer of wealth"). I could support an end to mandatory liability insurance if all roads were privately owned, but in that case the end result would be the same, as few of us would be willing to drive on roads whose owners didn't require liability insurance as a condition of using them. I might even be able to support it on public roads if we abolished bankruptcy, restored debtors' prison, and did everything else to make it in every driver's best interest to make sure he's in a position to pay for whatever harm he may cause to others. None of that is about to happen anytime soon, though, and as long as the law favors deadbeats over responsible people who pay their debts, mandatory financial responsibility is the best we can do. [Yes, I said "financial responsibility," not "insurance." Few states if any require auto insurance if you show you have adequate assets to self-insure.]

miriam said...

I guess we'll just have to agree to disagree.

CGHill said...

Something like 25 percent of Oklahoma drivers are uninsured; uninsured-motorist coverage costs me upward of $300 a year. I think I'm entitled to resent the deadbeats.

miriam said...

CG: I don't know how much insurance you carry, so I have nothing to compare it with. I myself have 3 cars and a $1,000 deductible and I consider my insurance bill quite reasonable.

I have home insurance too, and if anyone is injured the insurance company will pay, even if the injured person was guilty of something.

Nobody I know ever reports accidents costing them less than $1,000, not even my cousin the lawyer. I just carry insurance to make the State of Delaware happy.

Jerrica Benton said... the person above...only a very ignorant person would support the restoration of debtor's prison--especially in this failed economy.

Most people who lack car insurance don't lack it because they like to live dangerously or are spending their money on crack cocaine. It is because they are underemployed, unemployed or low wage owners who can barely afford to cover their most basic expenses. This group doesn't just include the people you imagine it does, either. Right now, many recent college and university graduates fall into this category.