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Car insurance in the US is quite odd when you think about it. It's mandatory and if you don't live in a city so is a car so defacto you need to buy it. On top o

Car insurance in the US is quite odd when you think about it. It's mandatory and if you don't live in a city so is a car so defacto you need to buy it. On top of that that doesn't actually cover your car! At the minimum level only cars you damage are covered so if you get hit by someone without insurance they are covered, you are not. Huge amounts of regulatory capture are involved and in my state (PA) it's almost impossible for someone to start their own car insurance company. I see plenty of room for disruption there. "In America you can buy a car for hundred dollars, but it costs a thousand to insure it" - https://www.youtube.com/watch?v=pMHdGBz2AqI https://www.youtube.com/watch?v=pMHdGBz2AqI

mikeash 11y ago
What's odd about that? It would be weird if driving were a solitary activity, but when you drive you place significant risk on other people. You can easily use a car to cause damage that greatly exceeds what an average person can pay, so to ensure that you don't leave others in the lurch, they require you to carry liability insurance. They don't care one bit if you damage your own car beyond your ability to cover it, because that's your own problem. There's nothing weird about a $100 car costing $1000 to insure, because the insurance isn't about the $100 car, it's about the $20,000 (or $100,000) car you might crash into.
- cmdrfred 11y ago
  I just always felt a more equitable distribution of funds (as PA is a no fault state) is to have the people who have $100,000 cars to buy the insurance as they are the ones with the disposable income to afford it. The guy making 8 dollars an hour at Walmart with his 900 dollar beater isn't getting much value from that set up.
  - deleted 11y ago
    [deleted]
  - mikeash 11y ago
    What exactly would you propose should be done to place the burden on the guy with the $100,000 car? If you don't require that the guy with the beater buy insurance, all you're doing is setting him up to be bankrupted of whatever little he does have if he's at fault in an accident. And what if he crashes into another poor slob making $8 an hour at the Wal-Mart who managed to take out a loan to buy a slightly nicer car? Or what if he cripples that person for life, and they require constant medical care for decades? You're setting people up to be screwed a lot more than they need to be. (Note that the no-fault status of PA doesn't really matter here, because it just means that if both drivers have no-fault insurance, they can't sue the other driver for minor injuries. Property damage and serious injuries are still fair game.) If you do require insurance, but have the cost of the insurance scale neatly with the cost of the car it covers, then you'll either have a really low limit on liability which brings back all the problems above, or you'll need to subsidize the insurance somehow. Overall, it seems unfair to say that a person is allowed to put other people at significant risk for property damage and injury without paying for what that risk actually costs. If you don't like that this is more burdensome to the poor than to the rich, I think that more general schemes to alleviate poverty, like government assistance, are the way to go, because car insurance is only one of many, many ways that life is disproportionately expensive when you're poor.
    - cmdrfred 11y ago
      four issues: 1:the guy making 8 bucks an hour can only afford minimum coverage, the insurance provides no coverage his car. 2:if we require people get insurance anytime they may potentially put others at risk then why isn't it required when you purchase a firearm? or alcohol? or rat poison? or a pet dog? or a baseball bat? The list goes on forever. 3: The cost of providing the car insurance is far below the cost of providing it when you exclude a few bad actors. (to date for me I've paid in over 20 grand, 0 return) Why is the rest of society providing a subsidy to people who can't drive? it isn't an accident when you change lanes every 30 seconds, tailgate, and drive aggressively. Why is society providing a subsidy for people with expensive cars as well? I've never had a 'accident' and yet I'm expected to pay a company for a product that gives me little value until I die, and while someone who has a 'accident' pays slightly more monthly than me I feel I cover far to much of the burden for them. 4:I drive a datsun in vintage racing events, my skill is far above the average driver. I can tailgate at 90 miles an hour with drum breaks. Why aren't my rates lower? beacuse the free market isn't allowed to do it's work on insurance companies due to a regulatory structure that was put in by insurance companies. Why does my credit score count by my skill does not? regulatory capture.

mikeash 11y ago

What's odd about that? It would be weird if driving were a solitary activity, but when you drive you place significant risk on other people. You can easily use a car to cause damage that greatly exceeds what an average person can pay, so to ensure that you don't leave others in the lurch, they require you to carry liability insurance. They don't care one bit if you damage your own car beyond your ability to cover it, because that's your own problem. There's nothing weird about a $100 car costing $1000 to insure, because the insurance isn't about the $100 car, it's about the $20,000 (or $100,000) car you might crash into.

cmdrfred 11y ago
I just always felt a more equitable distribution of funds (as PA is a no fault state) is to have the people who have $100,000 cars to buy the insurance as they are the ones with the disposable income to afford it. The guy making 8 dollars an hour at Walmart with his 900 dollar beater isn't getting much value from that set up.
- deleted 11y ago
  [deleted]
- mikeash 11y ago
  What exactly would you propose should be done to place the burden on the guy with the $100,000 car? If you don't require that the guy with the beater buy insurance, all you're doing is setting him up to be bankrupted of whatever little he does have if he's at fault in an accident. And what if he crashes into another poor slob making $8 an hour at the Wal-Mart who managed to take out a loan to buy a slightly nicer car? Or what if he cripples that person for life, and they require constant medical care for decades? You're setting people up to be screwed a lot more than they need to be. (Note that the no-fault status of PA doesn't really matter here, because it just means that if both drivers have no-fault insurance, they can't sue the other driver for minor injuries. Property damage and serious injuries are still fair game.) If you do require insurance, but have the cost of the insurance scale neatly with the cost of the car it covers, then you'll either have a really low limit on liability which brings back all the problems above, or you'll need to subsidize the insurance somehow. Overall, it seems unfair to say that a person is allowed to put other people at significant risk for property damage and injury without paying for what that risk actually costs. If you don't like that this is more burdensome to the poor than to the rich, I think that more general schemes to alleviate poverty, like government assistance, are the way to go, because car insurance is only one of many, many ways that life is disproportionately expensive when you're poor.
  - cmdrfred 11y ago
    four issues: 1:the guy making 8 bucks an hour can only afford minimum coverage, the insurance provides no coverage his car. 2:if we require people get insurance anytime they may potentially put others at risk then why isn't it required when you purchase a firearm? or alcohol? or rat poison? or a pet dog? or a baseball bat? The list goes on forever. 3: The cost of providing the car insurance is far below the cost of providing it when you exclude a few bad actors. (to date for me I've paid in over 20 grand, 0 return) Why is the rest of society providing a subsidy to people who can't drive? it isn't an accident when you change lanes every 30 seconds, tailgate, and drive aggressively. Why is society providing a subsidy for people with expensive cars as well? I've never had a 'accident' and yet I'm expected to pay a company for a product that gives me little value until I die, and while someone who has a 'accident' pays slightly more monthly than me I feel I cover far to much of the burden for them. 4:I drive a datsun in vintage racing events, my skill is far above the average driver. I can tailgate at 90 miles an hour with drum breaks. Why aren't my rates lower? beacuse the free market isn't allowed to do it's work on insurance companies due to a regulatory structure that was put in by insurance companies. Why does my credit score count by my skill does not? regulatory capture.