The Finch Formerly Known As Gold

15 January 2005

Splitting the difference

Last year the Oklahoma legislature more than doubled the mandatory minimum auto insurance in this state: the long-standing requirement of 10/20/10 ($10,000 for a single death, $20,000 for multiple deaths, $10,000 for property damage) was increased to 25/50/25.

This perturbed Rep. Jerry Shoemake (D-Morris), who is trying to roll back the increase, at least partially. Shoemake says the increase will create a hardship on agricultural and oil interests, who are likely to own motor vehicles that are seldom operated on the public roads but aren't exempt from liability coverage. And what's more, says Shoemake, we're discouraging uninsured motorists from buying insurance by jacking up the cost.

Shoemake's alternative proposal, 15/30/15, wins no points from Mike at Okiedoke:

Using Shoemake's logic, his proposal will still increase the number of uninsured motorists. And I doubt the few bucks saved with Shoemake's new minimum coverage will make any difference to already uninsured motorists. If that were actually the case, perhaps he should be thinking about lowering the requirement to 1/2/1 and then everyone would buy insurance.

I suspect that people go without auto insurance because they figure it's an acceptable risk. In Oklahoma City, the fine for failure to produce proof of insurance is $202. If the chance of getting busted is, say, one in twenty, the expected opportunity cost of driving uninsured is barely over ten bucks. Compare that to a thousand dollars or so in annual insurance premiums, and it's something of a miracle that only twenty or thirty percent of our drivers are uninsured. And it's not likely the city will raise the fine to $20,000 to compensate, either.

This measure affects me only peripherally, since I carry more than the new legal minimum anyway, but it's still an irritant, another example of the state's tradition of trying to micromanage everything possible. (The state Constitution is huge to the point of preposterousness; for example, its Bill of Rights contains, not a mere ten, but thirty-four items.) And I have to wonder just how much of the high cost of insurance is due simply to the fact that it's required by law.

Posted at 12:03 AM to Soonerland

TrackBacks if any:

1 in 5 oklahomans drive without insurance ... and IMHO the main reason is the cost ... at least the ones I meet in my work in the community. There are scofflaws who go through the mental machinations to figure "opportunity cost" but I sincerely believe they are few and far between with the majority being simply in poverty and having to choose between working, eating, and insurance ... it's that simple sometimes. Unfair to the rest of us .. yes, strictly responsiblity and economic wise but a reality nevertheless.

Posted by: Ron at 8:44 AM on 15 January 2005

The potential cost of not carrying insurance is much riskier than a $202 fine.

Recall when Wes Watkins, through negligent driving, rear-ended a family filled car, killing the parents. The surviving girls got a settlement of millions and Watkins served no time. I'd wager if it had been an unisured driver lacking millions in insurance or other assets, there would be some time served.

Posted by: MikeH at 1:12 PM on 15 January 2005

True enough. However, nobody's personal calculation is likely to take this into account, since nobody actually plans to run into anyone or anything.

Me, I worry that someone will tamper with my anti-paranoia medication, so I carry extra coverage. :)

Posted by: CGHill at 6:05 PM on 15 January 2005

I too carry extra coverage: 50/100/50. Only for the fact that I see myself too often driving next to cars worth more than that. And it was only slightly more than the old required minimum.

My risk lies with not carrying collision coverage. Needless to say, our vehicles are worth much less than $50K. :(

Posted by: MikeH at 8:39 PM on 15 January 2005

Which, in a way, undercuts Shoemake's premise; if you can buy 50/100/50 for, say, fifteen percent more than 10/20/10, which is about what I paid for it, it's hardly worth the effort to roll back the 25/50/25 threshold.

Were I to drop collision and comprehensive, which Ford Credit would frown upon at the moment, my insurance bill would drop by half.

Posted by: CGHill at 10:12 PM on 15 January 2005

I carry $1,000 deductible on my Collision which drops the premium considerably. I also carry no Uninsured motorists coverage or any medical payments. I spend probably 99% of my driving time alone and I have medical so it's double coverage.

Posted by: ms7168 at 7:07 AM on 16 January 2005