Auto insurance is a scam

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A street game of three-card monte.

The trick to mandatory auto insurance is that you're paying it. (Photo Credit: CC BY-SA/ZioDave/Wikipedia)

Too many people accept that mandatory car insurance is a fact of life in the United States. Beginning with Massachusetts in 1927 and appearing in most other states by 1970, compulsory car insurance has been foisted, in the most coercive sense of the word. Exorbitant sums of money are spent on coverage that most people never need. This has sparked claims that exist to this day that auto insurance is a scam perpetrated on the public, and that lawmakers have been bought by the insurance cartels.

Pay and pay without incident

Let’s say that a named insured pays an $500 annual premium for the “privilege” of mandatory car insurance. That’s $5,000 over 10 years, which is worthwhile if the insured is ever involved in a serious accident with leads to personal injury and/or severe property damage. However, various actuarial data studies indicate that on average, most drivers go 20 to 30 years without any at-fault accidents that require their automotive insurance to pay out.

Over 30 years, that’s $15,000 down the drain, money that could go toward more worthwhile investments like retirement savings, stock investments and college funds for children. Imagine losing a college education in a black hole. That’s what mandatory car insurance has been called by critics – as well as a scam.

But wait, auto insurance is necessary risk protection

Supporters of auto insurance claim that it is a financial tool that protects against catastrophe. Much like health insurance, when your aren’t in trouble, you don’t need the coverage, but when you are in trouble, you’re thankful you have it. Some of the ways automotive insurance protects the insured, according to any insurer out there:

  • Safeguarding the investment the insured has made in their car
  • Paying for accident-related medical bills
  • Shielding against personal liability for property damage
  • Protecting assets against seizure
  • Protecting against other uninsured or under-insured motorists
  • Protecting against costs associated with theft and vandalism, or natural disaster
  • Providing peace of mind

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No direct, specifically quantifiable impact of going without

It is theoretically possible to drive without automotive insurance and harm nobody, yourself included. Provided you’re never pulled over by a police officer, you’ll never have to provide proof of automotive insurance. Provided you’re never involved in an accident, either, you’ll never need insurance.

But what about the risk involved in allowing people to drive sans automotive insurance? It could be a valid point, but should theoretical risk that an individual might damage someone’s property or person impose obligation on everyone? Is there a direct, specific negative impact on others when one driver hits the road without insurance?

No, there isn’t. Yet Americans continue to pay because they are forced to do business with a cartel. If car insurance were optional, insurers couldn’t shake down consumers so easily with high surcharges over speeding tickets. As it is considered mandatory, however, consumers have no leverage. And since mandatory car insurance became the norm over the past 20 to 25 years, premiums have soared.

At liberty to choose

Individuals in a free society should, barring definite harm posed to others, be allowed to choose what is best for them. Basing a major financial obligation on the potential that something may happen should be unthinkable in such a society. When premiums were not cut in half in the 1970s when car insurance in the U.S. became mandatory, nobody should have been surprised. And like mindless sheeple, we continue to accept being raped financially.

Beware of auto insurance scams



American Spectator

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