By Lowell L. Kalapa
One of the reasons insurance experts give for the high cost of no-fault auto insurance premiums is that there are a lot of drivers driving around without insurance. As a result, those drivers who do purchase no-fault auto insurance have to pay a little extra to cover the cost of recovery whenever an uninsured driver gets into an accident.
Although the law does provide penalties for driving without no-fault coverage, the penalty is usually a fraction of what it costs to purchase the insurance and so many uninsured drivers take the gamble and hedge their bets against getting caught. No doubt with only a fraction of the total driving population covered, the costs of the premiums skyrocket as the fraction that purchase the insurance must pay to insure that the entire base is covered.
This is where advocates of the “pay-at-the-pump” approach believe that the only fair way to insure that all drivers pay is to hit them with the cost when they buy fuel for their vehicles. And to those people, it makes a lot of sense as one cannot drive their car, truck, or van without gasoline. They also argue that the more fuel a driver purchases means that vehicle will have a greater possibility of being in an accident as it will be on the road more often.
While these arguments seem to make sense, there are some serious problems with the “pay-at-the- pump” approach to insuring that all drivers have insurance coverage. First, there is the matter that just because one drives more does not mean that driver is a good or bad driver who has a greater or lesser possibility of being involved in an accident. For example, how does the purchase of fuel distinguish between a driver who has been convicted of drunken driving and someone who has never had a traffic ticket?
And what about the type of vehicle or distance that one has to drive? Two vehicles traveling between two identical points will have two different records as to the number of gallons of fuel consumed depending on the type of engine and the level of fuel consumption per mile. To the extent that housing costs tend to be less expensive the farther from the urban center that it is located, lower income families tend to live a greater distance from those urban centers where the jobs are located than those with greater means. Thus, those living in rural areas who are forced to pay for their insurance through the fuel tax will bear a greater burden than those who live in the urban area. Thus, this approach tends to be regressive, taking a greater share of the poor family’s budget for transportation costs than a more affluent family’s budget.
However, the most critical point that placing the cost of no-fault insurance on the purchase of fuel will have is that it will affect every single consumer as all goods and services are transported from one point to another. Thus, the cost of living will be exacerbated by the increased cost of transportation as a result of higher fuel costs. True, the cost of insurance is still a part of transporting goods and services, those insurance costs have some rationale. Those trucking companies which have good driving records will have lower premium costs than those who have poor driving records.
If the whole point of the “pay-at-the-pump” exercise is to insure that all drivers buy no-fault insurance, then there should be a way to insure that all drivers purchase insurance. A radical idea is that rather than merely slap a fine on someone who is driving without insurance, what if the vehicle was confiscated? Radical? Well, when you think about it, if someone has the means to drive, then they should have the means to purchase the insurance necessary to be on the public roads. If not, then they should not be driving.
Some will argue that the insurance is so expensive that they can’t afford it but if such a plan causes everyone to get insurance, then the cost of premiums should decrease. Radical? Maybe, but it is worth discussing, because what we have now is not working and paying at the pump has many serious problems.