Why don't we do mandatory minimum car insurance in the US?

Great Debates
1

I know in most places it is the law that you must have mandatory minimum car insurance in the US. But uninsured/underinsured motorists are a pretty big problem despite this.

An idea that I recently came across seems to be the perfect solution to this problem. Why don’t we just build the cost of minimum liability insurance into the cost of gasoline? Just add another tax right across the top, say a nickel more per gallon.

This way, everyone is covered. Period. It has the added bonus of directly scaling in regards to how often you are at risk of an accident. You drive more, you are thereby more often in a situation where you can get in an accident, you pay more.

Now I can hear the hue and cry and outrage out there from people (most people say this, statistically) who say that they are wonderful drivers and are better than most other drivers out there, and shouldn’t pay nearly as much as those other yodels who keep crashing into other people.

But the gasoline covered insurance is just the minimum amount necessary. Yes, you’d be subsidizing poor drivers who would otherwise be uninsured or underinsured. But you do that anyways already with your current insurance rates. Any time an insurance company pays out for an uninsured/underinsured claim, guess where that money comes from? Right off the top. All the good drivers who pay their insurance on time and don’t get into accidents nevertheless pay rates that reflect those claims.

Now the other issue I can see with this is some people are bad drivers. Some people deserve to pay more, because they cause more accidents. And I totally agree with that.

Any time there is an accident, there are police involved. They determine who was at fault, and they write the tickets. These would still go on the record, but now the state itself (or whatever body is levying the insurance tax per gallon of gasoline) goes after the person at fault for the rate increase. It will be just like a ticket. If you don’t pay it, a warrant goes out for your arrest. So the people who are bad drivers will still have to pay more proportionately, but now instead of being able to decide that they don’t need or can’t afford car insurance after all but nevertheless still need to drive, they will pay or be arrested.

And of course, it will just be minimum liability insurance, probably obtained through current insurance companies. So the insurance companies have nothing to fear. They’re not losing any revenue. And anyone who wants more than minimum still pays for comprehensive insurance.

So what are everyone else’s thoughts on this?

2

I’m not saying it is automatically a horrible idea but you would have to restructure the whole auto insurance industry. How would they individually win contracts if there is no way to compete for individual policies? It seems that one winning bid would just take all of the business for the whole state. There is only one rate right? There would be little need for lots of insurance companies and no obvious way to break the business up.

3

It’s a matter of state law, not federal law. I live in CA and you cannot register your car here w/o having proof of insurance.

4

Here is my recent thread on car insurance.

5

Yes, I just read through that thread. I see that A.R. Cane proposed this same idea, yet nobody responded to it.

So I am glad that I started this thread, I feel it is a very viable solution to the problem of uninsured/underinsured motorists, and would like to see it debated. Does nobody have any cons regarding this idea?

Yes, if it was state governments levying the tax, they may well use just one insurance provider and buy huge blocks of insurance, but keep in mind that individuals would still be buying insurance for anything over minimum liability. So there will still be competition, it needn’t turn into a monopoly type situation on the part of the one monolith that the entire state goes to for liability.

6

There is a massive problem with implementation that practically guarantees that it could never be implemented. The U.S. is very much a collection of states with different traffic laws, court systems, insurance requirements and everything else. There is nothing national about driving laws, insurance, and tort.

Imagine that State A implements this system. Drivers don’t have to have minimum liability on their own at all. This is fine as long as they stay in state A but most people don’t drive exclusively in one state.

Who is covered and where are they covered? Is it anyone registered in the state, anyone that buys gas in the state, anyone that drives in the state or something else? I assume it would need to be anyone driving in the state if you want to eliminate uninsured motorists almost entirely. You run into the laws of unintended consequences through any of these scenarios.

7

You’re right, it would be best implemented by making it federal.

The three states that currently don’t require minimum liability insurance would have their state’s rights viciously trampled in the process, sure. But they have problems anyways. Their system is essentially “not required unless you get in an accident”, which is functionally the same as requiring it and then having uninsured/underinsured accidents to deal with.

This could be just like federally “suggested” speed limits. Sure, if a state wants to they can have higher speed limits than 70, they just lose highway funding. Likewise a state could opt out of levying the insurance tax per gallon of gasoline, and be similarly encumbered.

But a federally required insurance might be too much to take (like federally mandated speed limits or seat belts) for our rugged individualist states. So what if we couldn’t have the federal system?

We could still do it state by state.

I still think that this is doable. What is the current means of dealing with out of state accidents?

If somebody from out of state has an accident in another state, their insurance covers it. If somebody from a state outside of Insuranceland-state has an accident, they’re covered.

Leaving us with only the problem of out of state uninsured/uninsured motorists, which I suspect will be a near-negligible number.

What do they do about that now in other states?

If somebody from New Hampshire, where minimum liability insurance is not required, causes an at-fault accident and totals somebody’s car in another state, what happens?

I don’t know. But I do know that the tax levied per gallon could easily accomodate whatever near-negligible numbers of out-of-state-uninsured/underinsured accidents happen. We just have to build it in at the beginning. Make it 6 cents a gallon instead of a nickel, whatever you have to do. It really wouldn’t need anywhere near that sort of increase, but you get the idea.

8

Sorry, I thought I should clarify a bit here.

When I say:

I mean that when the out-of-state individual gets into an accident in the state with minimum-liability built in, their out-of-state insurance covers it, just like it does now between mutually non-insurance-built-in states.

So it works on an individual state-by-state basis, too. Or, citing the New Hampshire example, at least as well as our current system does.

9

Your proposal involves two elements: no-fault auto insurance and switching from private insurance to government insurance. I don’t like either element.

In my state of Illinois, and in the 37 other states that don’t have no-fault auto insurance, an auto accident involves a determination of fault. If I’m at fault, my liability insurance pays for the other person’s damage. If the other person is at fault, his or her insurer pays for my damage. If the other person is at fault and has no insurance and no assets, then my UM/UIM insurance kicks in and pays for my damage.

If liability insurance is provided by the government and funded by a gas tax, then this determination of fault is meaningless. The government will be paying for my damage in either case. I don’t like that. It forces good drivers to subsidize bad drivers. Yes, I do that already with my UM/UIM payment, but not every driver that might hit me is uninsured. Today I only subsidize a few bad drivers; under your plan I’d be subsidizing all of them.

Furthermore, your plan must either be administered by the government, or contracted out by the government to a private insurer. Either scheme is an invitation to corruption and additional expense. Today, if I’m hit by a UM/UIM motorist, my insurer pays for my damage. As a private company answerable to shareholders and guarding their own assets, they have an incentive to control costs. They’ll make sure that the other motorist really has no assets, and they’ll minimize my repair costs in any way possible.

Government agencies have no such incentive. If the government administers the liability fund, they’ll pay any bill that I submit with minimal oversight. Fraud will be rampant. If they contract the function to a private insurer, the bidding process will be steeped in favoritism, with allies of the governor landing the lucrative insurance contract and customers with no recourse against crappy service.

10

:smack: Blech! Don’t get me ranting about national speed limits again.

Back in the early 80’s when 55 was the law it was administrated horribly.
The NHTSA was a major pain in the ass. There were all these reports to make out about enforcement. Some local & state police (including myself) were doing work for an angency they didn’t work for. I could go on & on about what a cluster it was. Some departments that accepted radar units that the feds paid for were sorry they did so. There was so much paper work involved. And you had to “prove” it was being used mostly to enforce the federally mandated limit and not, say, local limits. The matrix paperwork was absurdly long and redundant. Most police agencies don’t have stretches of road that were affect by the national limit, so they didn’t have to deal with the bureaucracy and therefore have no idea what a pain in the nuts it was. it wasn’t just “take a radar gun and stop speeders in the 55 zone”. The reports and graphs that had to be made out were retarded and time consuming.

The most ridiculous part was basic: it was a law that the states didn’t want crammed on them, and a law that less than 15% of the public obeyed. I’m glad it disappeared.I was afraid the same happy horseshit was going to rear it’s ugly head with the nationally mandated seat belt and .08 laws came up. So far it hasn’t…YET! :eek:

My point is, I can attest what a pain in the ass it is for those of us who work in enforcement when the Feds stick their nose in. Keep these things to the states and allow local control!

Worried about underinsured drivers? Insure yourself to the hilt and hammer them with severe penalties when caught. But leave the goddamn feds out of it!

11

I think whatever the minimum state required coverage is, it could be collected thru car or license renewal. Some quasi-government agency would be setuup to pay claims and private insurance companies could buy into the pool and help run it.

The plan could theoretically be cheaper and more uniform.

12

No, I don’t think the system I’m proposing is no-fault. As I said in the op, it would keep the determination of fault when accidents happen, and would be one step better than the current system because the raised rates are administered by the state or federal government itself, just like a traffic ticket. In our current system, Crashy McGee can get in his fifth at fault accident and decide that insurance costs too much now but he still needs to drive and then drive with no insurance. Under the system I propose, he would pay those increased insurance rates, or a warrant would be put out for his arrest, just like if you don’t pay a ticket.

So no, the determination of fault is not meaningless, and yes people will have to be personally responsible for causing accidents.

Yeah, this is about the worst objection I can find to it. But really it would not need any massive infrastructure, or even any huge new agency or bureau. The determination of fault will still be done by police. The tax on gasoline would just be added on top of current taxes. The insuring itself will be contracted out to a private insurer, so you still have the benefits of that with regard to them having an incentive to control costs.

And yes, there would undoubtedly be favoritism and nepotism and all sorts of “isms” going on when it comes to deciding which agency will get the contract. It’s called “politicking”, it’s what politicians do. If that’s the only real objection, then the same objection holds true for anything political. There are systems in place to handle it.

13

I’m not sure I understand your proposal. Are you proposing that the gas tax be set equivalent to some base rate for liability insurance for decent drivers . . . but then if you’re found liable for an accident, the state bills you for some additional amount? How much? Not the amount of the damage, obviously–if you could pay the full amount of damage, you wouldn’t need insurance. Are you suggesting that the state bill the driver at fault annually, for some period of time after the accident, for an amount that would be equivalent to the amount that your insurance would rise?

14

CA had some noises about no fault a few years back, IIRC the big angle the advertising pushed was the lack of compensation for pain and suffering. :rolleyes:

If it was up to me I would make licence renewal more expensive for those with poor driving records or histories of at fault accidents/dangerous infractions. This way those who trade paint more pay more and no weird infrastructure changes, the DMV already has that infraction/accident data, the insurance companies already have mountains of data on driving history patterns for determining a fee schedule for problem drivers.

Problem solved.

:cool:

15

A) The government rarely does things more efficiently than businesses.*

B) What about lawnmowers? Powerboats? Chainsaws? There are other things besides cars that use gas. What do we do about those? Do they get taxed for auto insurance anyway? Or do you just insure everything that uses gas? It does not seem fair to tax someone for car insurance when they are mowing their lawn. If the tax were to be applied to just gas for cars/trucks it would be a nightmare to administer and there would be ample room for fraud.

C) Driving is a privilege, not a right. Why should citizen A, who can afford insurance, be forced to pay for citizen Bs driving privilege when citizen B cannot afford insurance?

Slee

  • Yes, I am sure it is possible to find instances where government is more efficient than businesses but it certainly isn’t the norm.
16

Yes, which is exactly what insurance companies do now. But now it would have the power of the state behind it, and it’s no longer an option to decide it costs too much to pay for insurance because you’re such a bad driver. As drachillix said;

It would just be doing it through a city-issued ticket (much like the tickets an at fault driver receives now when police determine fault). Or do it through license renewal, like drachillix suggested.

So it needs no new infrastructure there. The police already issue tickets at the scene of accidents. The insurance companies already have a fee schedule and actuarial tables (or whatever equivalent). And now those at fault have to pay, instead of having the option of driving around with no insurance.

And as for powerboats and chainsaws and lawnmowers, yes it would be unfair to their users to be paying for insurance that they won’t be using. But really! How much gasoline do you use in a lawnmower? What percentage of gasoline sold at commercial gas stations goes towards chainsaws and lawnmowers? Besides, you’re already paying various state and federal taxes on those gallons of gasoline you get for your lawnmower, some of which go towards roads and infrastructure. So you’re already taking a hit there, and supporting something you are ostensibly not using with your lawnmower.

17

How would citizen A be forced to pay for citizen B’s driving privelege under this system? If it’s built into the cost of gasoline itself, citizen B does not have the option of not being able to afford insurance if he uses gasoline. And if he is not using gasoline, he is not driving, therefore citizen A is not paying for citizen B’s driving privelege.

18

My insurance rates decrease every year because I have no claims.

In fact, I get a refund check every year averaging $180, on top of getting the best rate possibe (I check with other companies about every 6 months or so).
Being an accident/violation free driver all these years has given me rock bottom rates.

Your system would make me pay the same rates as the shit heads regardless of what a good boy I am. Your idea of having the state go after those who cause accidents would not work, and yet would create a bigger police state than we already have. Fact is, in some cases the state already goes after dead beats. They don’t get anything. Those kinds of people usually don’t have anything to take.

Your idea sounds more like a socialist-style plan to give something to those who are too irresponsible to get on their own than it does a way to protect motorists.

19

This tax would provide insurance to people who presently have no insurance and drive anyway*. Why do people drive without insurance in the first place? My guess would be that most the people driving without insurance do so because they cannot afford insurance**. Now, there are a bunch of reasons someone might not be able to afford insurance. They could be poor workers who are really trying to make it or they could be people who have multiple DUIs, accidents or tickets which jacked up the cost of their insurance.

Insurance, as I am sure you know, isn’t flat rate. Not everyone pays the same amount, good drivers get discounts. This type of program hurts good drivers while rewarding bad drivers. Why? Because everyone has to pay the same amount per gallon regardless of their actual driving record. This type of program would help me and hurt my parents. Why? Because I am a higher risk than my parents. They drive a lot more miles than I do (they drive around the country in an R.V alot) and would therefore pay a lot more than I do when in reality I should (and do) pay more because I am a bigger risk. So they would be subsidizing my insurance.

Slee

*This wouldn’t be an issue if everyone obeyed the law and had insurance. Since not every one obeys the law and gets insurance we should just tax everyone and give insurance away to those who can’t or won’t buy it! :rolleyes:

**I am a recovering alcoholic. I lived in a halfway house for a while. Some of the guys I was in the halfway house were paying $500 a month in insurance due to mulitple DUIs and accidents. Under this type of system they would get insurance for an insanely low amount compared to the risk that they pose.

20

I think the non-coverage could be solved with a computer application. Have the state build a database with all the VINs and all their drivers license numbers. Shouldn’t be too hard since the data is already there. Add a few columns for insurance agency and coverage status. When you buy insurance, the insurance company logs in and registers as covering your vehicle(s). Let the policy lapse, and they log in and un-register your coverage. That same day, the state police come by and you either show them a new paid policy or your car gets a nice metal boot. Presto, no more uninsured drivers.