Insuring us Out of Driving - EPautos - Libertarian Car Talk
Eric Peters is a Libertarian gearhead, columnist and author.
www.ericpetersautos.com
The cost of new vehicles – which now “transact” for about $50k on average – is such that a large and growing number of people can no longer afford them. That’s not so bad, though – right? Because no one has to buy a new vehicle. True. But the cost of insuring the vehicle you have has been going up double digits annually – 25 percent, on average – for the past two years.
If this continues, what then?
Many people who were paying very little for a liability-only policy – which everyone who owns a car is required by law to buy as the condition of being allowed to drive – are now paying a lot more, even though they have not done anything to justify the double-digit increase in the cost of this coverage, which doesn’t actually cover anything except the hypothetical cost of repairing damage to some other person’s vehicle, if the “insured” is involved in an accident with some other person’s vehicle.
If that vehicle is someone else’s late-model $50,000 (or more) vehicle, it will cost hugely to repair it or – if the damage is bad enough – replace it. That anticipated cost is transferred onto the shoulders of the people who did not buy the $50,000 (or more) vehicle – or damage it. It is merely the hypothetical that justifies the actual – in the form of the double digit increase in the cost of this coverage.
Now, play this out a little.
Is the cost of new vehicles continuing to go up? What will happen to the cost of insurance when a new vehicle transacts for $60,000? We’ll all be paying for that.
Some won’t be able to – and then they won’t be allowed o drive (legally).
A person who does not own a $50,000 (or more) vehicle who was paying $300 annually for a basic, liability-only policy on his low-book-value old vehicle – which he keeps because he does not want to (or cannot afford to) take on the $800 monthly payment it takes to finance a $50,000-ish vehicle over six years – is being gradually pushed into making insurance payments that he eventually will not longer be able afford to make. Because other people choose to buy $50,000-plus vehicles – and because he is forced to pay what it costs to “cover” repairs to these vehicles.
Axiom:
Whenever you’re forced to buy something, that something is going to cost more rather than less. The cost of insurance coverage is no different.
Consider what happened to the cost of a simple, “catastrophic care” only health insurance policy that pays for nothing routine and only for the costs of extreme events unlikely to happen, such as a stroke. The cost of this coverage was reasonable – until the federal government (under Obama) decreed that everyone and everything be “covered,” including routine check-ups and tests. Naturally, these tests and so on became very expensive and everyone who was forced to buy insurance got to pay for that, even if they themselves avoided going to the doctor unless they really needed to.
Presto! Health insurance – a silly term, when you think about it a little since no one’s health can be insured – now costs so much working and middle income people can’t afford it. But they are forced to pay for it.
Car insurance at government-point works the same way. When you’re not allowed to say no – and when you’re forced to assume the burden of hypothetical costs imposed by other people, whose decisions you have no control over whatsoever, is it surprising that the cost of insurance has increased by double digits over just the past couple of years? The question now is: How much more will it increase – and how long will it be before people in large numbers are priced out of owning a vehicle, even a low-value old one, on account of being unable to pay for the insurance the government requires they carry?
It will likely not be long – given the rising cost of everything else.
Groceries, for instance. A $100 bill that used to buy a shopping cart full of staples now bags two plastic bags of them. In most parts of the country, the cost of the property taxes homeowners (sic) are forced to pay in order to avoid being evicted from what is of course not actually their home has also gone up – especially in the rural (and red) areas where these taxes were once low, on account of hordes of refugees from red areas moving into those areas to escape the high cost of living in a red area and bringing those costs with them. They often build huge homes twice the size of the modest homes in the area and thus – via raised assessments – increase the cost of the natives’ taxes, very much in the way that the affluent few who can afford to buy a $50,000 (and more) vehicle pass on the costs to those who didn’t buy one.
It is pretty obvious that owning and driving a car is becoming a kind of luxury – and luxuries are things most people cannot afford. It is not difficult to see where this leads. Whether intentional or not, the end result is the same. Working and middle income people (such as are left) will inevitably be forced to give up owning and driving cars they can no longer afford to insure.
We’ll know whether it is by design if nothing is done to ease the burden on those who are not incurring the costs.
This could be done in a free market-ish manner by limiting the cost of mandatory insurance coverage to covering the cost of repairing or replacing hypothetical losses up to say $30,000 – which would cover modestly priced vehicles. Let those who choose to buy a vehicle that costs more than $30,000 buy additional coverage to offset the cost of potential losses.
It’s entirely reasonable and so entirely fair.
And that’s exactly why it’s as likely to happen as Fauci being manacled and sent to prison for the rest of his miserable life.
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