Been pondering a few things lately…
How long since the law has been passed that you must have car insurance if you are driving?
How did it get passed?
Is there any other law out there which forces you to purchase a product or service from a private company? or are auto insurance companies actually government run?
Where is this law or similar laws in effect, if not only in the U.S. (or certain states)?
For those in areas in which this is forced upon you, does this bother you one bit?
Thanks
No
I can’t speak for the other 49 states, but in California it is a financial responsibility law. You have to be financially responsible, you don’t have to buy insurance.
You can show financial responsibly in three ways:
It’s not a federal law, its strictly state by state, but all 50 states require it. And, with only a few exceptions, its been this way for a very very long time. I live in NY and its been this way for longer than my parents can remember.
I don’t quite get your bewilderment with the idea. Allowing people to drive around without insurance is not even remotely practical.
I’d say it’s probably more in the interest of protecting the other folks driving around that you might get into an accident with. By requiring that you at least have liability insurance, they can try and protect some random shmoe from getting screwed over due to a traffic accident.
What’s the difference between a bond and insurance?
In New York, vehicle liability insurance is required, and there is a certain minimum amount of coverage. (Additional insurance for theft/damage, etc. is optional but usually a good idea.)
In addition, the insurer must be one that has been approved to do business in New York by the New York DMV. There’s no public insurance program. Competition is surprisingly fierce, given all the onerous regulation of the industry.
The idea of having insurance does not bother me, and I’m all for it. What I want to understand is how it became a law for citizens to purchase a product from a private company*
Also, should these insurance companies not be owned by the government, what would happen if they all went bankrupt?
*again, assuming these companies are not gov owned
It stems from the idea that “driving is a privledge.” I never really bought into that argument, other than it’s a convenient way for legislators to force you to do things.
But the days of “personal safety” laws and arguing pro or con are long gone and they are here to stay.
It amazes me how I managed to survive on just common sense, which I guess people don’t have any more, or the law community has exploited. (But that’s another thread :))
I’m not sure why you see this as unusual.
Doctors, lawyers and accountants are required to have malpractice insurance. Construction firms and contractors are required to have surety bonds. And drivers are required to have liability insurance.
It’s just one example of such a practice. It’s played out in other ways, as you mention.
I don’t see it as a personal safety issue, like motorcycle helmet laws, at all. There are no laws requiring you to have anything other than liability coverage. Even if the car is financed its the bank that insists on you having comprehensive, not the State.
Anecdotal with no cites, but:
Knowing some classic-car buffs, I used to hear from time to time about the relative recency of the laws regarding automobile titles in Alabama. I’ve heard more than once that “Alabama didn’t even require automobile titles or registration until 1971”. Presumably, this would extend to insurance (or else any mandatory insurance law would have a huge and obvious loophole).
The upshot was that every so often they’d get an old car from elderly folks in Alabama that needed some kind of special title in my state, presumably because the vehicle had never been titled before (?).
Perhaps not true in all states … but very strictly, the law is not that citizens must purchase a policy from a private company. Self-insurance is allowed. I am not sure how it works, but I’m sure you have to be able to demonstrate that you can pay out a large sum of money easily in the case of an accident. Bill Gates, for instance, may not need to actually buy car insurance for himself – he may have the option of proving to the state of Washington that he can fork over $250,000 at the drop of a hat.
True, this is not practical for very many people. So private insurance companies provide their services for us proles.
Not suto insurance, but:
In the wake if Hurricane Katrina, (almost) every private homeowner’s insurance company quit writing new policies in most of Southern Louisiana (private insurers have been trickling back in gradually since early 2007). The state ended up operating their own insurance “company” to insure the uninsurable. The state’s homeowner’s insurance is far and away the most expensive insurance out there as they have a “captive audience”.
You don’t want to take the government to task for “making” you buy private automobile insurance … their doing you a favor.
If you never have a claim? Not much. In both cases you pay a premium.
If you have a claim, a bond, not being insurance, has no reserve for paying claims, so the bond company is going to pay and then come back to you for the bucks.
So basically if you want to get a bond instead of insurance, go to the bonding company and prove you have so much money you don’t need a bond, and for a fee they will sell you a bond. Then if there is a claim, they pay and come to you for reimbursement of the $$.
If you have that much money laying around IMHO you would be a fool to get a $35,000 bond, as many claims would far exceed that value, and the person you injured would come after you and your assets.
For more see surety bond at Wiki.
Wrong. New Hampshire does not require insurance (or seat belt wearing). I think if someone has a bad history the state (or a court maybe) can make a special case for an individual person and require them to have insurance to drive.
Back in New Zealand we don’t require insurance either but a common low cost option if you have an old car is a policy that covers “third party, fire and theft”. "Third party meaning liability. Ten years ago I remember that costing me something like $100 NZD per year. When I came to the US and bought a cheap old car, I went to get insurance and told the agent that I only wanted liability coverage. He worked out the price (about $70 per month) and then I asked, well, how much for full coverage of the car itself? I was surprised at how little extra price that added. I think about 90% of the price was liability coverage which is pretty much the opposite of New Zealand. In NZ it is not possible to sue for personal injury which I guess makes a difference.
I’m not sure what your common sense has to do with this, or “personal safety” laws. The insurance laws don’t exist to ensure that you are covered if you total your car or hurt yourself, it is perfectly fine if you choose not to cover this and pay out of pocket (unless you have agreed to comprehensive coverage as a condition of financing, but that is a private agreement, not law).
You can have all the common sense in the world while you are sensibly stopped behind the line at a red light, it isn’t going to stop the guy driving at 70MPH while reading a newspaper from crasing into you. Insurance laws obviously aren’t going to do anything for your “personal safety” here either, but they are intended to insure that this newspaper reading schmuck can pay for the damages he causes to you and your car.
In a world with expensive assets hurtling past each other at 70MPH and owners with widely varying economic status I believe it would be impractical to not demand that people have the ability to pay for a certain amount of liability. It would be wonderful if I could rely on every single other person on the street promising from the bottom of their hearts to drive very competently and to do whatever it takes to make restitution if there was an accident, but I cannot do that, and there hasn’t been a time in history where I could have done that.
Yeah, well that’s because your cheap old car had an extremely low replacement value and the insurance company wouldn’t be paying you very much should it have gotten wrecked. Try a price comparison between liability only on a brand new car and full coverage and you’ll probably be surprised at just how much it will add to the premium.
This really depends on your stats: I am an over 30 married woman with no dings of any sort on my record (tickets or accidents) and I pay pathetically little, even with comprehensive coverage on a 2 year old low-end sedan. Upgrading from a ten year old low end sedan only added $200/year or so.
Shocking. The insurance company wanted $600 a year for my 1988 GMC van ($375 for liability only). When I went for a quote on a brand new Sprinter, they wanted $3200 a year. I have no tickets, no accidents, spotless driving record… but I am male. Liability only on the Sprinter was about $950.
To be fair, you are also in LA. But yeah, for everything with a $500 deductible I pay about $1200/year in Dallas. But I do have decades with State Farm and my homeowners policy there, as well.