For many years many states had no such requirement. You could post a bond in the event of an accident. Ohio was that way until the 198ps or so. But people drove without insurance, got in wrecks, and the cost was covered by the person not at fault. Not fair to anyone involved.
So they mandated insurance IF YOU DROVE A VEHICLE… you didn’t have to drive. Driving is optional. Insurance is mandatory if you chose to drive. You don’t want to pay for insurance, don’t drive.
You don’t understand what a monopoly is then. By your definition All telephone companies grouped together are a monopoly. Or all grocery stores grouped together are a monopoly.
Personally, I’m glad there’s these regulations. You sound like a person who’s what’s known as judgement proof. Someone who has zero assets to sue for if you cause an accident. You’re the type of person these laws are geared for so if you cause an accident, you’re not causing more grief through finance hardships.
Those regulations are to protect the public. They basically state that an insurance company must have the cash to pay out a certain percentage of insurance claims every year. Look at some natural disasters over the decades and you’ll find dozens of insurance companies filing bankruptcy because they didn’t keep enough cash and were unable to pay on insurance claims. For decades families paid into these insurance companies for homeowners’ insurance and then a disaster hits and they lose their home and now the insurance company files bankruptcy and they l can’t rebuild. They basically end up losing everything.
I would be surprised if you didn’t have 7 to 10 different companies offering car insurance where you live. Watch TV for an hour or so and you will see ads for Progressive, Geico, Liberty Mutual, Allstate, State Farm and The General. 6 companies itching to protect you from the largest personal injury law firm in the country (started in Florida…) from bankrupting you when you cause an accident.
Operating in trust if I said that correctly might be a better way to say it. We have anti trust laws in the US because different companies in the same industry had agreements to price their products a certain way with a minimum allowed price to maximize profit across all the members of the trust. It’s practically a monopoly but technically different. A trust type situation seems to be happening with the auto insurance industry right now. They all have rates that are too high for many and too low for some. They get you in on a lower rate when you switch and then gradually raise it up. They won’t raise rates on higher risk drivers who drive much more than average. They won’t lower rates on vehicles which are infrequently used. Allstate will give a lower rate on vehicles that are driven less, in exchange for occupying your OBD II port with a cellular connected tracking device.
I know somebody who started an insurance company. Their plan was to identify and eliminate the 3% of customers who generated something huge like half of all the insurance claims. Then they would give highly discounted insurance to the remaining 97%. Initially everything was going great. Then something happened and they went out of business, or were put out of business. I have no idea what might have happened. A lot of money was lost by the time the whole thing was over with.
Next we’ll have to have insurance to walk down a sidewalk. Then it’ll be well you don’t have to walk outside. Just stay inside if you don’t want to buy insurance.
Here is an interesting idea. In those two States where we don’t have to buy auto liability insurance, could we buy some kind of discounted insurance like coverage that’s outside of regulations? Could I start my own insurance company that takes a small bond of $5000 to prove that the customer is a responsible person, and then give them $50,000 of coverage at a greatly reduced price? The $5000 would be like a $5000 deductible. Having the initial $5000 payout covered would greatly reduce the burden of insurance claims.
Even my insurance company (NJM) has started to advertise on TV, and up until a year or so ago, their only advertising consisted of a few billboards. A few years ago, they changed their name from NJ Manufacturers Insurance to just NJM in order to be able to operate successfully in more states. Their policies are now available in PA, CT, MD, and Ohio in addition to NJ, and I imagine that they are advertising in their “new” states just as much as they do in their home state.
Maybe you could do it for $20/month but for less than $60/month I get:
$100.000/$300/000 liability insurance
$15,000 Stated Value
And the ability to sleep well every night.
An the ability to sleep well every night
“That’s exactly my point. We have to pay high premiums because cheaper business models are illegal.”
And the reason “cheaper business models are illegal.” is because the companies that tried them frequently were unable to pay the claims.
In the “Good Old Days” a hurricane, flood, wildfire, ect. would hit a State and instead of paying the claims the Insurance Company would simply go bankrupt. Accordingly, the States were the first to enact Insurance Laws and even today, pretty much all the regulation is done at the State. NOT Federal, level
But tell you what, since you sound like a smart cookie, “For a meer $1,000 (cash only) I’m able to offer you a lifetime $1 Million policy from Flying Dutchman Insurance of Luxumberg. Our special algorithim’s and machine learning apps allow us to give you everything you deserve.”
Your rates depend on a lot of things like your location. I pay what amounts to about $50 a month on each car. That is for full coverage with a $200 deductible. My umbrella policy is about another $25. You can’t get an umbrella without both car and house together. Hope you never find out you should have had an umbrella when someone slips in your driveway.
… or sues you for more than the limits of your car insurance coverage.
I had never thought about Umbrella coverage until one of my work colleagues was sued for an incredible amount of money by a man and a woman who were badly injured in an accident, and my colleague’s 17 year old daughter was the driver responsible for that accident.
Over the next 1.5 years, until the case was settled, my colleague seemed to have aged about 10 years from the stress and the worry. The bottom line is that the case was settled for the limit of his car insurance plus ~$20k. It hurt, but it could have turned out worse, and luckily it didn’t bankrupt him.
After that incident, I took out an Umbrella policy, and I still carry that type of coverage 35 years later.
This whole insurance discussion reminds me of the old Rodney Dangerfield joke, “My wife bought me a life insurance policy and now she keeps complaining that I’ve never used it!.”
For 50+ years at the insistance of my State, auto lender and mortgage lender I’ve been grumpingly paying insurance premiums for something I never used but it only would take one moment of inattention, one scam artist or one crazy jury to completely change it.
And the thing that some folks forget is that even if you’re completely innocent and blameless, if you get sued you’ll need an attorney, which at $300-$400 / hour can quickly and easily reach the mid 5 figures, win or lose.
People think of insurance as service plans. They are not. You don’t get oil changes or engine repairs with them. They are in case of adverse circumstances like tornados or accidents. The whole idea is to never have to use them, but are there to make you whole again if the worse happens. Yeah and life insurance should be called death assurance but no one would buy them.