Are compulsory auto insurance laws fair?

Whether compulsory auto insurance laws are, in fact, the best possible solution to the problem of uninsured motorists must be assessed carefully. It would be too simple to justify these laws on the basis of the correctness of their moral objective—making sure all drivers will pay for any damage they cause in auto accidents. But other tests need to be reviewed.

Fines for Not Insuring Your Vehicle

Do these laws achieve their objective? What are the economic and noneconomic costs of such laws? And are the costs associated with compulsory laws commensurate with the benefits expected from the application of these laws?

No state has yet been able to solve the problem of uninsured motorists through a compulsory insurance law, no matter how diligent its enforcement efforts. These laws do not achieve their objective of making sure all drivers have insurance to pay for the damage they cause. In a free society, it is impossible to force people to buy a product they prefer not to buy, for whatever reason. Get cheap sr22 here.

In terms of cost, these laws are expensive to administer and enforce, both for state agencies and insurance companies. They also increase insurance costs for standard risk drivers, because they force insurance companies to insure more high risk drivers, thus driving up the price of insurance for standard risk drivers who must subsidize the high risk group. The laws also burden responsible, standard risk drivers with bureaucratic red tape.

The alternative to compulsory auto insurance laws is financial responsibility laws combined with first-party UM and UIM coverage. Financial responsibility laws cost states far less to administer and enforce and also avoid increased costs and red tape for insurance companies and consumers. UM and UIM coverage, which are relatively inexpensive, combined with health insurance and disability insurance, assure that there will be relatively few uncompensated victims of traffic accidents.

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