Why Mandatory Auto Insurance is a Bad Idea

How much does one spend on mandatory auto liability insurance over one’s lifetime?  If you are a rancher with five vehicles, at $400 a vehicle for liability, over a 50 year lifetime, that would equal $100,000 spent on liability insurance.  If you are a good driver that means you have spent $100,000 paying for someone else’s auto accidents, and he would be $100,000 better off financially if he had not bought the insurance.  Wouldn’t it be a better system if those people who cause the accidents paid for their own accidents?  So the first reason that mandatory auto insurance is a bad idea is because the good drivers get hurt financially, and end up paying for damage they did not do.

Reason number two is that poor people cannot afford the high prices of high-risk policies.  As of this writing (2010) it is hard to find liability insurance for under $400 per year for an excellent driver, and the high-risk drivers pay from $1500 on up to $3,000 per year.  Even by paying in monthly payments, the $1500 policy costs over $200 for the first month since the first insurance payment covers two months as the insurance company likes to have a “buffer” month in case the payment comes in a few days late. A two hundred dollar increase in expenses may be enough to send an indigent onto food stamps or down to the food bank. A food stamp survey done in Billings, MT, showed 12 of the 96 food stamp applicants said auto insurance was a reason for needing food stamps.  A study done by Dr Maril, showed 44% could not buy food due to mandatory auto insurance.

The third reason mandatory auto insurance laws are bad is that they are costly and impossible to enforce.  Within the last few years, many states have been using an online insurance verification system that matches insurance company information with car registrations to verify if the insurance is current on the vehicle.  According  to the article “Vehicle Insurance Verification Programs, How They Work”, It costs the insurance company $50 to maintain each vehicle’s insurance status in the databank. That increases the cost of each motor vehicle policy $50. And the vehicle insurance verification can be easily circumvented.  Note that theses systems identify which vehicles are insured. It does not identify if the driver is listed as being on the policy. If the driver is “borrowing” the car and is not listed on the policy, it is still driving without insurance. This is a common tactic of high risk drivers.  A  male DUI will not be listed on his wife’s motor vehicle policy, yet his wife will allow him to drive the car, and it is still driving without insurance, and renders these vehicle insurance verification systems useless.

And then there are those who drive without insurance, lose their driver’s licenses or plates, and continue driving without driver’s license and steal someone else’s plates so they can get to work.

The proponents of mandatory auto insurance like to present the billions of dollars of damage done by uninsured drivers, but I would like to take a closer look at the problem. A person only needs a $1,000 vehicle to get to work (ask any indigent). If a person chooses to drive a fancy $20,000 vehicle (which he does not need and has no right to drive on the highway), maybe it would be better if he insured it himself. If that person  has the $20,000 vehicle totaled by an uninsured driver, the damage would be $19,000 less if the owner had opted for a $1,000 vehicle, and as I see it, the owner  would only be out $1,000 if he had bought a vehicle sufficient for the job. This right to drive on the highway works both ways.  The $20,000 vehicle owner does not have the right to drive on the highway, either.

As for uninsured motorist insurance which pays for the injuries caused by uninsured drivers, the victim’s own health insurance will pay for the injuries caused by an uninsured driver. Uninsured motorist insurance may also pay for such things as pain and suffering, but the medical bills get paid for. I don’t see what the big deal is.So the  fourth reason this is a bad law is that uninsured drivers should not be required to pay for damage done to expensive cars that are not necessary for a person to get to his job. If a person wants to drive a brand new expensive car, they should bear the responsibility of protecting it themselves.  That is not only my argument, but also that of the banks that finance the new cars “Protect it yourself!”

The fifth reason these laws are bad is that they conflict with some people’s religious views.  There is one Mennonite sect in Georgia that bans its members from the purchase of insurance.  It is not my policy to trample over someone’s rational religious beliefs and I would wish others would feel the same way. Mandatory auto insurance is not the only way to pay for motor vehicle damage; find a way that does not hurt the good driver, does not trample on someone’s religious beliefs, does not put millions on food stamps for the next gazillion years and does not try to starve the poor people to death. You buy a house, you pay for it in installments, you buy a car, you pay for it with installments, you cause damage from an accident that is your fault, pay for it with installments, why insist in all this other carnage?