sbglobal2010
Rookie
In a really free market, whoever owned the roads would demand that drivers have insurance. If there's an accident, you need to make sure that the injured party gets restitution.
In this context, State-mandated car insurance makes sense. However, car insurance businesses are licensed by the State. There's artificially restricted competition. The net effect of the "mandatory car insurance" law is corporate welfare for car insurance corporations. A group of people can't pool their risk and form an insurance association, unless they're compliant with the State bureaucracy.
Also, car insurance vendors are usually required to charge everyone living in an area the same rate. A car insurance vendor may not:
Charge people based on "# miles driven". If I drive 10k miles/year and you drive 20k miles/year, you're probably twice as likely to get in an accident.
Charge people based on their evaluated driving ability. Drivers are licensed by the State, and not by the insurance salesman. If I'm half as likely to get in an accident as you, based on my driving ability, then the insurance corporation may not charge me less.
The net result is inefficiency and corporate welfare.
The car insurance tax is partially avoidable. I don't have to own a car! Not owning a car is inconvenient, but I can use a taxi or rent a car or get a ride from a friend if I need one.
In this context, State-mandated car insurance makes sense. However, car insurance businesses are licensed by the State. There's artificially restricted competition. The net effect of the "mandatory car insurance" law is corporate welfare for car insurance corporations. A group of people can't pool their risk and form an insurance association, unless they're compliant with the State bureaucracy.
Also, car insurance vendors are usually required to charge everyone living in an area the same rate. A car insurance vendor may not:
Charge people based on "# miles driven". If I drive 10k miles/year and you drive 20k miles/year, you're probably twice as likely to get in an accident.
Charge people based on their evaluated driving ability. Drivers are licensed by the State, and not by the insurance salesman. If I'm half as likely to get in an accident as you, based on my driving ability, then the insurance corporation may not charge me less.
The net result is inefficiency and corporate welfare.
The car insurance tax is partially avoidable. I don't have to own a car! Not owning a car is inconvenient, but I can use a taxi or rent a car or get a ride from a friend if I need one.