If the state didn’t force you to buy car insurance, what would happen to the quality of auto insurance?
Why?
Well, what would happen is all the inefficient insurance companies would go out first. By inefficient,I mean those insurance companies that do not hold up to their deal. (Example: if you get into a crash and the insurance company does not give you coverage you paid for. It is mainly those auto insurance companies that have a sign in the front that says “No drivers license, no problem!”)
Those companies that stay in business constantly compete with the rest to ensure quality of service, the cost for services, the productivity of their workers, etc.
What do you mean by quality of insurance? I don’t see why it would be any different. People would pay the insurer to protect against the risk that they ruin their own car or someone else’s car.
I can see different effects of people not being required to buy car insurance. It makes sense to me, and is OK with me, that the government forces people to buy car insurance. I believe the government’s role is to step in when someone is doing something wrong to another person.
I am not OK with the following situation:
Someone is driving on the road with no insurance and the potential liability of >$100k, but this someone’s net worth is lower than $100k. If this person causes an accident and causes $100k in damage, this person should be forced to pay the damages. However, he clearly can’t if he doesn’t have the money. The other person is left hanging and paying for the damages caused by someone else. At best, the other person is left paying off a huge debt to the other person over a long period of time.
This is different than forcing people to buy health insurance. If you choose not to buy health insurance and then get sick, you are not causing someone else to incur the costs.
The law relates to the choice of consumers to purchase or not purchase auto insurance.
Each consumer has their own reasons to purchase the coverage they need.
Those without income or an expensive car would probably either purchase the cheapest coverage or go uncovered. Most likely nothing to a reasonably priced liability coverage.
Those with a modest income who can’t insure themselves would probably purchase coverage for liability and property and medical to protect from potential lawsuits for the modest wealth they’ve saved.
Those with higher incomes would probably insure against lawsuits more so than general liability. They would have the most to lose in those kind of suits. The physical damage to either vehicle would probably be self-insured.
Quality of the insurance would be geared toward the consumer. The most likely impact would be on the low end coverages where there may be fewer consumers.
With a leaner customer base, auto insurance companies would have an incentive to increase the quality and decrease the cost of their insurance.
A government mandate on consumers to purchase insurance means that insurance companies can offer some pretty crappy coverage at a higher price than what the market would typically bear. Having the choice not to buy insurance would be a tool to drive insurance companies to provide better coverage for lower prices.
How did we ever live prior to these mandates?
Are you not accepting the risk of driving your vehicle knowing that others may not be insured? Would it not be prudent to obtain the coverage for yourself to mitigate such a risk? So there are a lot of ways to look at this.
Liability damages are a matter between the two parties, not government. Government has no legitimate purpose in this regard.
If the other party were say a deer, and your vehicle was damaged, you are ultimately responsible for your own vehicle. Where litigation comes into play is if there was intent or negligence. You assume a certain amount of risk just by being on the road. You’d have to prove that your property was violated in the collision and provide justification for the damages being sought. In some extreme case, sure the poor guy is going to get screwed, but then why did he have a car in the first place without assuming that risk?
The world is not a rubber-padded room where bad things don’t happen.
KC Farmer,
How do you deal with the following scenario:
Someone is driving on the road with no insurance and causes an accident for approximately $100k in damages. This person’s net worth is $50k.
I don’t think that’s a good solution.
Let’s add a couple other factors to this.
Person A is driving on the road with no insurance and causes an accident with Person B for approximately $100k in damages. Person A was texting on his phone and crashed into the back of Person B at a stoplight. Person A’s net worth is $50k.
Do you just say “tough luck” to the guy who got his car smashed? Even if Person B has insurance to protect him against this, why should the insurance company not be allowed to collect the money from person A? The insurance company is insuring person B, NOT Person A. If you say that Person A must pay the insurance company, well, he can’t because he doesn’t have the money. What is your solution? Do you put him on a payment plan? Does he file for bankruptcy? Do you put him in debtors prison?
All of these are worse solutions than forcing everyone to have car insurance, IF THEY WANT TO DRIVE A CAR. I understand bad things happen, but IMO it is a logical solution to say that all people must have car insurance to avoid an innocent person/company being stuck with thousands of dollars in damages.
And if you think the scenario i described is an “extreme case,” i would disagree.
Also, to say:
“Liability damages are a matter between the two parties, not government.”
That is very illogical if you think about how that would play out in the scenario I described. So Person A caused the accident and ultimately owes person B $100k.
How is the government not to be involved? Are you supposed to expect Person B to say “yea you’re right i cause that accident and i owe you $100k. But i don’t have it so let’s work out a payment plan where i can give this back to you with the appropriate amount of interest”
?
You could. If they fail to pay you take them to court.
The bottom line is one guy destroyed $100,000 worth of another guy’s property. What do you think typically happens when this occurs, with or without a car/insurance being involved?
Well that seems like a job for courts and there is such thing as private courts… government is not needed
cporter,
You bring up a good point. Do you think the fact that car accidents are rather frequent makes it more logical for the government to mandate insurance?
[quote=“Isaac “Izzy” Marmolejo”]
Well that seems like a job for courts and there is such thing as private courts… government is not needed
[/quote]
That’s a good point. I know this could probably open up a whole other discussion, so is there a past thread that discusses private courts?
I don’t understand how it would work if Person A belongs to one private court and Person B belongs to another private court. Or what if Person B belongs to a private court and Person A doesnt?
First, currently 1 in 5 drivers (~20%) are uninsured with all of these Government mandates in place.
Insurance is all about risk. The risk is 100% on each driver to operate their vehicle. If two vehicles collide, both parties are responsible for their own damages.
You purchase insurance to cover your risk. While currently 20% of the drivers are uninsured now, there are in addition to that a number of people who are under insured.
Given that you know that even with Government mandates 1 in 5 drivers are uninsured, and some are under insured, why would you not cover yourself in the event an uninsured motorist hits you?
Government mandates don’t protect anyone, and can even cause some to put their faith in “minimum” coverages without regard to the actual coverage they need to carry.
You made no mention on the insurance coverage of person B. If person B didn’t have coverage, then he’s a fool. Whether person A was texting on his cell phone, smoking crack, banging his girl friend, we’re assuming he’s at fault. While person B, or his insurance company which wasn’t defined, can sue for damages, Person A doesn’t have enough to cover it all. Frankly, having 50K in assets and not having insurance would be pretty stupid on the part of Person A.
Uninsured motorist coverage typically involves insuring against people who have little or no money. The Insurance companies realize this up front. Sure, they have the right to attempt to collect whatever they can from the party in the wrong, but there’s no guarantee. What insurance companies do is calculate the risk of loss due to uninsured motorists, and apply that to the premium for the coverage.
Now in the grand scheme of things, Government mandates do little to nothing to protect drivers - either those who cause accidents or those who are hit. So Government is violating everyone’s right by using force or coercion to require people to buy insurance with no real benefit to anyone. Is this a legitimate solution?
If the roads are privately owned, however, then there is a more legitimate way to handle things. If I own the road then I have the right to demand that only insured motorists may drive on my roads. I could even confiscate vehicles from the bad actors for violating my personal property (within reason), or levy fines. I don’t use force or the threat of force to get people to buy insurance.
All i’m saying is that by not requiring car insurance, you allow people to drive around and take the risk of potentially causing $X of damages to another person, but they are only able to cover <$X in damages.
However, now that i think about it, anyone walking around could potentially cause damage through some sort of negligence that they cannot afford to pay for. Cporter brings up a good point that the government does not force people to insure themselves against every risk in life, so how does this work outside of car insurance?
As you said, this situation (assuming person A is at fault) leads to Person B (or Person B’s insurance company) wanting to sue Person A for damages. If Person A cannot pay, then maybe he does file for bankruptcy (which leads to another discussion of whether or not the government should control the bankruptcy process). And it also leads to another discussion about how exactly does Person B sue Person A for damages. Isaac said there is no need for government courts and that this can be resolved in private courts, however I don’t understand how private courts would play out in this situation. e.g. if B and A have different private courts that disagree or if B has a private court and A doesnt, or vice versa.
Had a pretty good discussion back in January on this topic.
https://forum.freecapitalists.org/t/dispute-resolution-system-in-a-libertarian-society/16989
It’s impossible to come to a conclusion one way or the other when the government is involved. There is no market in which consumers and entrepreneurs can freely make this choice so we don’t know what the optimal solution is. I can certainly tell you which kind of road I would like to drive on, but this is a value judgement and so I can’t estimate with any presumption of accuracy what might happen if there were a market.
there are several past threads but let me give you this article to read on private law… its a good intro to the topic
Auto-insurance should be compulsory on public roads. It’s the roads being owned by the state that’s the problem, not insurance. If I owned a road I would never dream of letting anyone on it without proper insurance.
Strictly speaking, there is no limit to a person’s potential liability.
That said, if a person is found to cause damages that are greater than his net worth, he should be forced to pay the remainder in the future. If this means his wages are garnished or he has to work at a “restitution center”, so be it. Interest could also be charged on what he still owes. The victim should not be left hanging in the long run.
Why aren’t you okay with this?
Any/all of the above, yes.
How are those worse, exactly? How is forcing everyone to have car insurance a (more) logical solution? In practical terms, “forcing everyone to have car insurance” means that all drivers are legally required to have at least a certain minimum amount of car-insurance coverage. Your hypothetical situation can still play out just the same in spite of this legal requirement.