Over the weekend, the Dallas Morning News reported on the changes in the number of uninsured motorists in the state since the TexSure program went into effect. The short version: There wasn’t much of a change.
Later the same day, Grits for Breakfast analyzed the same report, as well as the DMN story. Scott Henson points out that even with Dallas’ extra measure of impounding the cars of people found to be driving without insurance, a quarter of all Dallas drivers are still carousing city streets uninsured.
So if the threat of having your car impounded isn’t enough to make you call up a discount insurer for the minimum liability coverage, what will? Henson has an interesting solution.
Drivers should pay at the pump through the gas tax for minimum liability coverage and essentially “nationalize” that market. Doing so would immediately cover every driver and eliminate the need for each driver to have a separate insurance payment for minimum liability. Insurance companies could still deliver liability insurance just like some today participate in Medicare or Medicaid. And they could still sell extra coverage for one’s own vehicle, etc., so there’s a significant auto insurance market beyond selling minimum liability. But if it’s going to be a requirement to purchase insurance – to the point where criminal penalties and property seizure result if you choose not to enter into a commercial transaction with a private insurer – it’d be a lot cheaper and easier for everyone to just make it mandatory and universal.
I will admit: I have no idea how that would work. Who would you call when some nimnod hits you going the wrong way on the tollway? As it stands now, if you get a DUI or have too many accidents on your record, you have to buy different insurance, more expensive insurance. Part of the incentive (besides you know, not dying or killing someone else) to be a good driver is the fact that your insurance rate stays low. If you pay at the pump, would that incentive be removed, since the pump wouldn’t have a clue if you were Otis the town drunk, Miss Daisy, or Raymond Babbitt?
16 comments
What could possibly go wrong? Medicare and Medicaid have proved to be successful government run orginizations.
Texas should adopt the system used in Massachusetts. The license plates stay with the person, not the car like in Texas. You have to have insurance to obtain the plates and the insurer will not stop charging you for insurance until you turn the plates into the registry, receive a plate return receipt and provide the receipt to your insurer.
“So if the threat of having your car impounded isn’t enough to make you call up a discount insurer for the minimum liability coverage, what will?”
Seems simple to me. Go to jail. Go directly to jail. Do not pass Go.
If you forget to carry your POI, go sit in Lew Sterrett for a while and make your one phone call to State Farm or whoever to have them fax proof of coverage to The Man. And when they find out you do have insurance, you still pay a fine for not carrying proof.
Of course, it won’t ever happen, just like we’ll always have people getting killed by a driver who has 8 DWIs.
Legislators continue to pass laws that nibble at the edges of the problem. You can be convicted of DWI without being seen driving the car in question, but you can be caught red-handed multiple times and still be out driving around.
The State of Texas doesn’t really want to solve the problem of irresponsible driving, it just to enact ineffective solutions that enable all parties, including the now fraudulent MADD, to claim they’re taking action.
Yes, this sounds like a rant on drunk driving laws, but the principle is the same for insurance and several other issues.
We already distribute risk and costs of liability across all insurance holders, I don’t think including those without it would make a huge statistical difference in how much we’d all be paying via this pump method. Those of us can get our “Cadillac” plans on our Acuras for extended comp and collision and towing, drop uninsurred motorist, and probably stastically end up with similar total pricing and coverage, but now we’ve included all those drivers who won’t/can’t get insured. Also, there would be an actual correlation between miles driven and liability rates. The actual implementation and administration of such a program would be quite a feat by a state that can’t even properly distribute Energy Star appliance rebates, though.
Michigan went “no fault” in the 1980’s, basically you covered your own car/loss, regardless of who is at fault in an accident. Because your rates were based on your own driving record, a good record meant low premiums. And adding to the minumum coverage for things like loss of income had a direct benefit back to the premium payer (only).
If you were in an accident with an uninsured driver, your policy covered your loss, the uninsured driver is not reimbursed – even if it was not their fault – because they didn’t bother to cover themselves.
Ok, first let me say that I am not one of those people that points to illegal immigration as the cause of all our problems. However, this article reminded me of something I recently saw about Farmers Branch:
“In 2007 … 33 percent of the accidents involved uninsured motorists,” Koch said. “That’s the time frame when we really started ramping up on the illegal immigration ordinance. In 2010, right now, those incidents are down to 4 percent.”
http://www.wfaa.com/news/local/Dealing-with-illegal-immigration-A-tale-of-two-cities-98388104.html
Not saying that all the drop is due to issues surrounding illegal immigration, but that is simply an amazing stat (assuming it is true).
Hit in ‘09 by an uninsured, unlicensed, illegal alien in Farmer’s Branch. At leaset his totalled car was towed at taxpayer expense.
Texas becoming a “No fault” state might fix the problem. Each party goes to their own insurance regardless of who is at fault in the accident. By choosing “No fault” coverage, all parties relinquish their rights to sue each other. If you choose not to carry insurance, you’re out of luck as you won’t be able to sue the other party.
The stats suggest that the laws were designed to drive as many as possible into purchasing insurance from the campaign-necessary auto insurance industry without alienating that 25% still crucial for successful reelection.
Isn’t this what we call a win-win scenario?
@ JS – It would be interesting to see if that statistic holds up under more research.
I don’t think it would be a stretch to assume that illegal immigrants as a group would be less likely to carry insurance, due to the fact that it would require additional documentation that they might not possess. Plus $$$.
A report by the AAA Foundation for Traffic Study found 20 percent of fatal accidents involve at least one driver who lacks a valid license. In California, another study showed that those who have never held a valid license are about five times more likely to be involved in a fatal road accident than licensed drivers. I would bet that the 25% of uninsured drivers in Dallas is equal to to the 25% of people driving around without drivers licenses at all.
There is not any punishment for being an undocumented alien in Dallas might as well go for broke and be uninsured and unlicensed. I have been standing in line at numerous grocery stores around town where they accepted the customers Mexican drivers license to purchase alcohol. Wanna crack down on uninsured drivers, ban Mexican IDs at the beer store. USA licenses or passports only.
Which is worse: getting hit by an uninsured driver and having to deal with your own insurance company using the uninsured/under insured provision of your policy
or
getting hit by someone with a minimum coverage policy with Farmers Insurance Company where you have to deal with a claims adjuster with no medical training that refuses to pay what is owed under the policy (the adjuster reportedly has a bonus structure based upon underpaying claims) so you have to sue in order to get them to pay (they have on staff attorneys and don’t have to hire a real attorney) which takes years and in the mean time you cannot access the under insured provision of your policy and you are stuck with the medical bills.
Pay close attention to the uninsured / under insured coverage limits in your policy.
Bethany, your readers comparing it to no-fault insurance are right on, that’s exactly what I’m suggesting and the claims would work the same as in no-fault states. I’m just suggesting a way to guarantee comprehensive coverage.
FWIW, the commenter who said “What could possibly go wrong? Medicare and Medicaid have proved to be successful government run orginizations (sic)” doesn’t realize those are INCREDIBLY efficient organizations by comparison to insurance companies. Private health insurance has 20+% overhead/profits, compared to about 1% or less administration costs in those government programs. Government pays millions of Medicare and Medicaid claims with no problem and the same would be true of pay-at-the-pump minimum liability.
Also you ask, “As it stands now, if you get a DUI or have too many accidents on your record, you have to buy different insurance, more expensive insurance. Part of the incentive (besides you know, not dying or killing someone else) to be a good driver is the fact that your insurance rate stays low. If you pay at the pump, would that incentive be removed”?
The premise of your question, though, is flawed because you’re not taking into account the 25% uninsured rate. Right now if you get a DWI, have too many tickets, or just don’t have the money, one in 4 people drive WITHOUT insurance. So instead of the “penalty” you suggest they should suffer as an “incentive,” under the current system those folks often don’t pay and those who do pay higher premiums to compensate. Unless you can force those people to pay – and criminal laws, car towing, etc., haven’t worked – those assumptions about incentives fall flat.
Besides, there are other, more important disincentives to bad driving – traffic tickets, your own safety, and the price of any comprehensive or collision coverage you may choose to purchase (remember, we’re only talking about bare-minimum liability coverage).
BTW, I’d bet dollars to donuts the FB stats in this string are bogus. Illegal immigrants make up 12% of the population or so, and a big proportion of them are kids. You don’t get to 25% of drivers countywide without lots of home-grown Americans driving without insurance.
When I said I’m “suggesting a way to guarantee comprehensive coverage,” btw, I meant to cover everyone, not “comprehensive” as in a comprehensive insurance policy.
I kind of like the no beer without proper ID tactic myself.
BTW, here’s a very detailed paper proposing the pay at the pump idea that fills in a lot of the detail I’m probably misstating:
http://www.rff.org/documents/RFF-DP-98-13-REV.pdf
My wife worked on insurance rate issues at her previous job and I’ll admit she’s where I learned of the idea, which she understands better than me!