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Bankroll Your Own Auto Insurance

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I really, really thought I saw this somewhere, but after searching and searching, I determined it was my own idea.

Auto insurance is a racket. You're required to have it, so supply and demand are not much of a factor, and that means unfair rates. People are basically penalized for things they can't control: gender, age, etc. Just because I'm a 19 year old male doesn't mean I'm a reckless driver, mmkay? Their statistics shouldn't give them the right to assume things about me.

Many people don't even end up using their insurance, yet month after month they must pay their pound of flesh. My idea is a new paradigm in auto insurance for those who consider themselves responsible drivers.

This would be a service offered by your bank. They would insure you for the minimum amounts required by your state. In the unlikely event of an accident, the funds will be taken from your bank accounts. If your balance is insufficient to cover the damages, you owe the extra to the bank and must pay it off with interest, just like a loan or credit card.

Spacecoyote, Feb 06 2009

How it works in the UK http://en.wikipedia...ance#United_Kingdom
wiki article [MadnessInMyMethod, Feb 06 2009]

Vehicle Insurance http://en.wikipedia...i/Vehicle_Insurance
[Spacecoyote, Feb 06 2009]

One way to opt out http://ohioinsuranc...ter6/chapter_6a.htm
If you happen to have a big chunk of change you don't need. [Zimmy, Feb 06 2009]

[link]






       Baked in the UK, or at least it used to be. Large fleets like utility companies (BT was one of them) were covered by a bond scheme; the vehicles were not covered by insurance in the usually accepted sense.
coprocephalous, Feb 06 2009
  

       Sort of Baked in the UK - you need to either have 3rd Party insurance, or make a £500,000 deposit with the Accountant General of the Supreme Court - probably not very useful for most 19 year olds. Realistically, even £500k is probably too little, remember you are not just insuring against damage, it is quite possible to kill or seriously injure someone.   

       Perhaps a way to prove you are not a reckless driver (advanced driving tests are an option in the UK, but I don't know how much they affect your premium), or perhaps a GPS tracker recording acceleration, speeds, times or driving etc, would be a good way of getting sensible premiums for young drivers
MadnessInMyMethod, Feb 06 2009
  

       There are advanced driving tests available in the US which some insurers give discounts for. That still doesn't change that you're paying for a service they're betting you'll never use.   

       It also depends on your vehicle, for instance, motorcycles can cause personal injury or death but are unlikely to cause major damage to others and their vehicles.   

       I don't get why auto insurance is required to cover $15,000 of personal injury in this state, isn't that more of a health insurance thing?
Spacecoyote, Feb 06 2009
  

       //motorcycles can cause personal injury or death but are highly unlikely to cause damage to others and their vehicles//
You're kidding, obviously.
coprocephalous, Feb 06 2009
  

       //However, in the case of motorcycles, the chance of causing extensive damage to other vehicles is relatively low (as opposed to damage to oneself) and thus liability insurance premiums are often lower.// [wikipedia]
Spacecoyote, Feb 06 2009
  

       Damage to others: Ask Heather Mills.
coprocephalous, Feb 06 2009
  

       Well I meant "others *in* their vehicles". Not driving on the sidewalk or walking in the middle of the street is just common sense.
Spacecoyote, Feb 06 2009
  

       I was shocked at first about the motorbike bit, but it's probably true. Motorbikes can only really go fast on a big road, where everyone else is protected by their car. If you have a crash with one, chances are the damage to your vehicle, and especially to you will be much less severe than if you have a crash with another car. It will still exist, but less of it, hence less payments, and so lower premiums.   

       SC - If your driving injures someone else, then it should be you that pays for the injury Shirley- not their health insurance. $15,000 seems incredibly low, in the UK the minimum is (I think) £250,000 for everything, not split down into sections, but (again I think) most policies cover several million. You are not just covering the medical bit, but the cost of time off work, long term care etc....
MadnessInMyMethod, Feb 06 2009
  

       The $15,000 is for your own injuries to yourself...it's $50,000 per accident for bodily injury to others.
Spacecoyote, Feb 06 2009
  

       Thinking further, are their rates so unfair? There is a lot of competition in the motor insurance market, so most companies are working on low margins. Just because you need something doesn't mean it must be a racket, after all you need food, but competition keeps prices low. I know someone who works in insurance and he reckons they pay out about 101% of the premium money they get in - and only make a profit because of the interest on the money sitting around in their bank account.   

       The statistics bit apportions the premium as accurately as possible between the drivers - statistically I supose they probably do pay out most on newly qualified drivers with big engines, so it is fair to charge them more. It seems from the other annos and the wiki article that there are ways to 'prove' you are a safer driver and reduce your premium.   

       OK- the bit about your own injuries does seem a bit strange.
MadnessInMyMethod, Feb 06 2009
  

       The title is slightly misleading; not technically, but because it makes people think in the wrong direction.   

       I like this idea, specifically the part by which money paid out under the insurance automatically becomes a loan. The big question is whether the average 19-year-old would qualify for a loan of that size. (Ooops, I caused a pile up on the motorway... dang, I'm a student with no current assets other than this newly wrecked car... where's the number for that bankruptcy lawyer?).   

       For older people who do have the assets to justify the loan, it does make sense for four reasons:
1. This rewards and encourages careful and safe driving
2. It avoids the drip, drip, drip of insurance premiums
3. Most importantly, it put you back into the blame assignment equation and ensures you get your chance, in court if necessary, to prove liability; this is a fundamental right which insurance companies try to take away from us by making back-room deals between themselves
4. If you get hit by an idiot driver using this policy, you can relax with a sense of justice in the knowledge he will be paying for the damage himself, for quite some time to come.
  

       Personally, the concept of mandatory insurance seems wrong. There are perfectly good legal systems through which damages should be claimed, and established procedures which mean that people pay what they can, when they can and no more than they can. If I am to blame for a motor vehicle accident, then it should be down to you to settle or take me to court and have damages, and possible punitive damages if I was driving like an idiot, awarded. The whole concept of insurance companies really does subvert justice and the law.   

       We don't need to have insurance to use a pen and paper, and yet the potential for financial damage that can be achieved using such simple instruments far exceeds that of most vehicle collisions. Let's not even think about whether we should be required to take out insurance in order to connect to the internet.
vincevincevince, Feb 06 2009
  

       You have to look into the laws where you live. Technically, I believe you don't have to have insurance in some places - but you have to have a LOT of money or possibly equity in order not to carry compulsory insurance.   

       I found Ohio's rules on google (because it was the first state that had a link to what I was looking for).
You can submit a $30,000 bond to the state or a $60,000 real estate backed bond in lieu of compulsory insurance. (see link)
  

       What you propose might actually work.
Zimmy, Feb 06 2009
  

       I do agree with the 4 points vincecubed made. I like having mandatory 3rd party insurance (or a very big bond) though. I'm a fairly safe driver in a small car, and have never had an accident, so my premium is quite low. I like having that huge guarantee behind me that if something does go wrong and I do injure someone, then I won't be declared bankrupt, have to pay for their care for the rest of their life, or that they won't get anything.   

       Even more importantly, I like to know that the idiot who has just cut me up also has that money behind him, and if he causes me to be injured, then I will at least get some financial compensation to start putting my life back together. I hate all of the 'no win, no fee' lawyer culture we seem to be getting into, but 3rd party insurance doesn't seem to fall into that too much.
MadnessInMyMethod, Feb 06 2009
  

       Hmm...I looked around and found that where I live (Oregon), there is a such thing as a "Self-Insurance Certificate", however mere mortals cannot apply for it without special permission from the Federal Motor Carrier Safety Administration.
Spacecoyote, Feb 06 2009
  

       What I find amusing (though not in a "ha ha" sense at all) is corporations that are bigger and wealthier than the insurace companies, purchasing insurance.
FlyingToaster, Feb 06 2009
  
      
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