Make Car Insurance Fairer

Forbes ^ | 03.17.03 | Ian Ayres and Barry Nalebuff

[discostu]

I put some more in depth advice in 59, some of it might help. And don't forget about shopping around, there might be better deals out there.

[justshutupandtakeit]

Thanks. I could probably save a little by switching companies but I feel a degree of loyalty to Allstate because it paid a large homeowner claim w/o the slightest quibble and in fact gave me more than I would have asked for.

[discostu]

Loyalty is good but are they loyal to you? If you start making noise about leaving you might be able to get some rate reductions. Remember, when push comes to shove if their choice is to get 3Gs from you instead of 0 they'll pick 3Gs, you've just got to make sure they're not opperating from a position where they think the choice is getting 4Gs from you or 3. Their job is to get as much money out of you as possible, you're job is to give them as little as possible. Where those two meet is called "a good deal".

[Publius6961]

I'd just legalize shooting an uninsured motorist at the accident scene as a variant of the he needed killin' defense.

Works for me!

[1Old Pro]

Insurance is a quasi-socialistic system. Is it any wonder it is expensive, cumbersome, and unfair?

[Publius6961]

So some one that drives 20 miles a day is twice as likely to get in an accident as some one that drives 10 miles a day.

Damn!
I must be better than I thought.
I drive 36 miles each way on I-5, arguably the most hair raising interstate due to trucks and two-lane sections.

5 years now and counting...

[Joe Hadenuf]

Excellent advice......

[discostu]

Don't jinx yourself. Freeway's are considered safer because accidents are less likely (what with everybody going the same direction), but that get's evened out by freeway accidents happening at higher speed and causing more damage. So it's a wash in the eyes of the insurance companies.

[discostu]

Insurance isn't socialism, it's a bet, and it's betting against yourself. The company is betting you won't need them and will therefore put in more than you take out. You're betting you will need them and will take out more than you put in. Aside from the bet it's really just putting aside money for emergency use.

[1Old Pro]

Actually it's spreading risk. In a way it's a chance bet, but what happens if you get run over by a drunken kid without insurance? You Lose. Or you get sued for 10 million? You lose.

It spreads risk out among the bell curve of accidents and losses assuming some will collect more than they put in and others will put in more than they collect.

[laotzu]

"Insurance isn't socialism, it's a bet"

With a bet, you stand to lose or gain. Insurance is there to indemnify, or, put you back to how you were before you suffered a loss. No better..no worse. There is no gain, as in gambling. There is no loss(from the ins co). It is not like a bet in any regard.

The premium paid is for the opportunity to transfer your risk onto them(the insurance company). Insurance companies accept other's risks, freeing them from potentially life destroying catastrophies. It is for accepting this transfer of risk that the company earns the premium; regardless & irrespective of whether any claims are paid.

The law does not require anyone to transfer their risks. You can accept, and prepare to handle your own losses. Self-insure.

[discostu]

Sure there is, if you "win" the bet they buy you a new car before you've paid them for a new car, ther's your gain the difference between what you've paid to date and the check they write... of course in order to win the bet you'll have to get in an accident and total your car. On the other hand if you lose the bet you give the insurance company money for decades and never get a dime out of them.

Given that the laws are done on a state to state basis I wouldn't make any blanket statement about self insurance.

[wcbtinman]

"...it's curious to me how some folks think...somehow it's all price fixing and whatnot."

You are aware, of course, of the anti-trust exemption for the insurance industry via the McCarran-Ferguson Act?

Trust me, it is price fixing. The proper solution is to get rid of the govt mandates, and allow the free market and civil liability statutes to control the price of insurance. And get rid of their anti-trust exemption.

[laotzu]

"Sure there is, if you "win" the bet they buy you a new car"

True. But; only if you have lost a new, insured car. If indemnification does not warrant a new car, you won't be getting one.

If determined to see a contractual agreement as much more than just analogous to betting, then that is all it can be for you. Certainly, that is not how the state, actuaries, insurors, or reinsurors see it. Those who run most of these companies are keen business men. They do not shape the lives of their companies with a daily rolling of the dice. This is not a bet.

The premium charged for most satellites starts at 100%. That is....to insure a $1mil satellite will cost $1mil. Virtually all satellites are insured. As you can see, this is quite different than gambling.

"I wouldn't make any blanket statement about self insurance."

I would.

Proof that you are financially capable in the event that you are personally liable for damage or injury, is the most the law can, or need, require.

[discostu]

The important part is that if the damage to your car exceeds what you've paid prior to the claim being filed, you "win" and get more out of it than your put in.

It's kind of like faro, it's really a sucker's bet and the house always wins in the end.

But really you're takiung this FAR too literally. It's a quip, a joke, chill out, relax, have a beer.

[discostu]

On your last thing on self insurance, that absolutely will NOT pass in AZ. They want proof of insurance by a third party corporation recognized by them as a valid insurance company before they'll register your vehicle. And if your insurance has lapsed for the next registration you need to prove that you're paid up to be covered for at least the next 6 months. They don't give a crap how much money you have in your pocket, that's not proof of insurance.

Like I said, given that the states vary their insurance laws DRASTICALLY form one to the other blanket statements really don't work.

[discostu]

Here http://www.dot.state.az.us/mvd/faqs/scripts/faqs.asp?section=mi
Arizona requires that every motor vehicle operated on our roadways be covered by one of the statutory forms of financial responsibility, more commonly called liability insurance, through a company that is authorized to do business in Arizona. This includes golf carts, motorcycles and mopeds.

No self insurance here.

[Publius6961]

BUMP

[RWG]

People who drive more are safer or they wouldn't be able to drive more.

[eno_]

My wife always complains about my driving, but she's the one that obliterated one side of her brother's rent-a-car in my driveway with my Land Rover (The Disco suffered only a cracked turn signal lens).