I’m a firm believer in automobile insurance. After all, you’re driving a potentially lethal weapon that can hit or be hit by another vehicle. It only takes a half-second of inattention or a slippery road for two or more vehicles to come into crushing, grinding contact. In all but a few dozen of the more than 7 million reported accidents each year someone is at fault and should, after all, be responsible for the financial damages. Hence, we have insurance.
Actually, that’s not quite the case. According to the insurance industry about 9% of cars on the road are uninsured. Nine out of every 100 vehicles out there either have no insurance or their owners have paid into a state-mandated uninsured motorists’ pool that pays out some amount of money when accidents occur.
Like most people - and the law in almost all European countries - I think everyone should have insurance and if not he/she shouldn’t be allowed to license the vehicle. Just like driver’s licenses and license plates are required, insurance should be a mandatory feature of car ownership. Most state legislatures have tried for decades to make insurance mandatory, but there are pressures keeping them from succeeding.
Those pressures come from low income and immigrant groups as well as the fringe groups that oppose “big brother,” but the greatest pressure comes from the insurance industry. Yes, I said that correctly. The insurance industry opposes mandatory auto insurance!
Their argument is not that mandatory coverage would lower the overall (which it would) premiums but that the statistics gathered over the past 50 years show that accident claims have less to do with whether or not a vehicle is insured, but rather with how many miles it’s driven each year. They state that the average mileage of uninsured cars is half that of insured ones, which accounts for the lack of data that might otherwise show higher accident rates for the former group. In addition, the industry makes an argument that uninsured drivers tend to be more cautious in their driving habits than insured ones. Hmmmm.
I don’t refute the overall statistics because they are probably correct. I do refute the insurance industry’s basic argument against mandatory insurance, however, because I think there’s a bigger reason the industry is against the idea. I think the problem is lawyers.
Think about it for a moment. In a large number of accidents involving two insured vehicles it’s common for the party hit to sue the offending driver for additional damages. While it’s permissible to sue an uninsured driver in the same situation, hardly anyone does so because the assumption is that the uninsured driver has no assets. Since all litigation lawyers really do is transfer wealth - and the uninsured driver probably has little, if any wealth - what’s the point of suing?
In the words of Mark Twain, “if there’s only one lawyer in a small town he will starve. If there are two lawyers in that small town, both will prosper.” I think the insurance industry is painfully aware of that truism and realizes that it can save a lot of money by shoving financial losses inflicted by uninsured drivers onto those of us who pay for insurance. The industry has tried for years to institute “no fault” insurance but less than half the states have adopted it in one form or another. New York state has it, but the system is rife with fraudulent claims made by unscrupulous law firms colluding with equally crooked medical providers. They’re getting away with it, too.