I am still trying to figure out how to argue this one. Naturally, people ask the question, “If the government didn’t set up fire departments, who would?” My answer would be, those who find it in their interest to protect their house or property from burning down. Then comes the question, “What if a home catches fire that is uninsured” or “What if the fire spreads to an uninsured home?” This is where I start to become a little weak in my argument. One thing that I can think of is that insurance companies would make sure that the fire department still puts out the fire on the uninsured property to make sure that the fire doesn’t spread to properties that are insured, who could then file an insurance claim. The only problem with this would be that if people begin to pick up on the fact that their house would be protected by the fire department, whether they have insurance or not, they may be inclined to stop paying their insurance.
Its an issue of the ‘free rider problem’ then isn’t it? Except there really isn’t a problem. Those who find value in having a fire department will fund it, whether others benefit as well will be a non-issue. Now of course, free riders shouldn’t excpect to get a free pass either. While we can expect that volunteer fire departments will put out a fire in a house that is uninsured, or otherwise, not paying them; said free rider can not expect to claim any money from the insurance company for damages on their property. Will they get their houses stopped? Sure, but that’s it. They’ll still have the incentive to buy in into the insurance program to ensure that they receive compensation from the insurance company and so able to rebuild the damaged areas.
What if someone dies who didn’t have life insurance?
Then that’s their tough luck.
If you want a service (such as insurance) you have to pay for it. Welcome to the world of no free lunches.
I don’t follow with your example. Life insurance will not save a person’s life. Fire insurance could potentially save someone’s home in an economy with private fire departments.
How could Fire Insurance protect a house from fires? Isn’t that what you would be paying a fire department for?
Fire Insurance would only compensate you for damages if a fire does occur.
Perhaps you are getting a little confused over the actual service, and insurance. Much like people confusing Health Insurance with actual Health Care.
Also, here is an article which might interest you, “The Development of Municipal Fire Departments In The United States”:
I’m not sure I see your point.
What difference does the exact nature of the specific insurance matter one whit?
I would imagine that since insurance companies are more interested in keeping claims to a minimum, they would do their best to help prevent fires from completely destroying a house or spreading from one house to the next. This is why I also implied that they might have a close relationship with the fire departments. I’m not describing what fire insurance does today, I’m merely coming up with a logical explanation of what they might be like if we were living in a society that didn’t rely on public goods and services.
Before the advent of government caretaking people from cradle to grave, volunteer fire departments were the norm. In fact, in many small towns that do not have the tax revenue to support an official fire department, there exist small volunteer fire departments.
This.
Strangely enough, people do in fact want to protect their things.
Something else to keep in mind is that most banks require you to purchase fire insurance if they make you a home loan. Most people may be insured for this reason alone.
In a truly free market every dime that an insurance company loses on a fire claim is an incentive for them to play jazz and come up with solutions to fires, or increase their rates with gives the consumer and incentive to do the same.
With these two forces in play you can be sure that the market will provide a solution if one is needed.
Use a real world example.
http://blog.heritage.org/2009/08/26/how-private-fire-departments-success-undermines-obamacare/
There are places where it is completely privatized, where the government does not contract out the service. You would have to search for that.
Perhaps if the public weren’t forced to fund the enormous costs of fire departments, they could afford personal fire suppression systems that would act much faster therefore reducing damage and saving lives.
I keep reading that fire departments actually receive very little tax payer money.
I would argue that someone who does not pay for the initial fire-fighter insurance should have to pay for the full costs of putting out the fire which is necessary in order to protect neighbors. If the individual is forced to pay the full cost then isn’t that government coercion as well?
I would argue that someone who does not pay for taking my car should have to pay the full costs of my car back to me. If he’s forced to pay the full cost, then isn’t that government coercion as well?
Sorry, I couldn’t resist. 
Why does the theoretical possibility of some “free riders” suddenly becomes so immoral and problematic just when we start talking about free markets? Considering that the State is practically one big “free rider” factory.
Suddenly, the biggest socialists (and I don’t mean you) are so concerned about some people not paying their “fair” share.
..and that could also be used as an argument against it. Tax money are wasted elsewhere. Because government DON’T GIVE A FUCK about “their people”. It is not some benevolent charity.
QFT.
An elaboration on the free rider problem and states:
If we assume people will free ride in markets, why won’t they free ride in states? People will attempt to promote their own narrow self interest and try to free ride off any projects the group is selfless enough to provide. For example, I might believe that free markets are best for everyone, and still turn around and vote for special privileges for my business. In short, I don’t see how democracy is supposed to provide public goods. Monarchy is the only true form of government!