I was on coast-to-coast road trip when I got into an accident in TX. Someone was trying to pass me on the left in a turning lane, veered into the incoming lane, and then hit my vehicle's front wheels from the back.
The police ticketed the other driver, and told me that insurance will surely take care of that on my side. "Wow, it's worse than we thought", they said, looking at the footage from the security camera. There were eyewitnesses too.
Now, this was a $6K car (used Fiat 500) that I got specifically for the road trip, intending to resell it in the future. I didn't get comprehensive coverage for it, figuring that if I damage it, welp, it's on me; and if someone else does — that's why we have mandated liability insurance, right?
...I got zero ($0.00, zlich, nada) from the other driver's liability insurance. They informed me that their expertise concluded that the accident was my fault, and, by law, they don't have to abide by the police report.
That's to say, the only way to get any money from them is to sue them, in TX. Figuring that the car is registered in California, and the damage was about $3K, they decided to not pay me anything at all.
Because they can.
Now, if I had comprehensive coverage, they'd be facing my insurance company — because one of those has to pay up. But they're facing me, so I'm welcome to sue or get shafted (with a nice side of gaslighting from the insurance agent, who was very convincing about how I should trust their assessment).
The whole thing is a scam.
It seems like you may have been screwed over, but also don’t completely understand how auto insurance works in most places which might be partly intentional for the industry.
In most places damages to your vehicle are covered by your own insurance. You can sue the other driver and their insurance will cover them if necessary, but generally you’re only able to be reimbursed up to a certain amount which is why you need to have insurance yourself. Yea, it’s backwards and effectively forces you to have more insurance than you might otherwise want or need.
Well, you are generally (AFAIK, this is true of all US jurisdictions) legally entitled to your full actual damages if the other driver is completely responsible, but they are only required to carry a certain amount of liability insurance (or, alternatively in many cases, bond); beyond that, you are stuck collecting from them individually after securing a judgement, which may be impractical if they simply don't have the assets.
Michigan for example. https://www.michigan.gov/documents/autoinsurance/ip206a_6799...
Beyond that, you should insure yourself sufficiently because you can’t depend on others to have adequate coverage. Doesn’t matter that you can sue if they have no money.
The public policy motivation for liability insurance is to protect the lawsuit route. If you sue an uninsured driver and win, you might not be able to collect (getting blood from a stone). But if they have liability insurance you can collect on a judgement.
You choose to drive with only liabilty insurance, and are upset that insurance didn't cover an accident when you had no liability.
That doesn't mean it's a good idea to not get comprehensive insurance, but police reports should probably carry some weight without requiring a suit.
Even without insurance or greater wealth, a party from whom you believe a liability should exist who has no interest in paying could have done the same thing here. If you aren't willing to sue over a disputed liability, it might as well not exist.
> but police reports should probably carry some weight without requiring a suit.
Any proposal to do that in effect makes the police investigation a court of first instance, which either means creating additional procedural rights that apply before it can be completed (driving up costs) or a very real denial of due process.
Not nessasarily. The 'additional weight' could still be something that requires a suit to take advantage of directly, but which the threat of compels behavior. For example, many localities have rental laws that compel the landlord to pay thrice what they would otherwise owe in certain circumstances. E.G. if my landlord simply refuses to refund my security deposit without proper reason, or without following proper procedures within 45 days, then I can sue for 3x the deposit and attorny fees.
A similar thing can be implemented for vehicular damages. Something along the lines of:
1) If you are found liable and
2) Were given adaquete notice and oppurtunity to pay and
3) Ought to have known you were liable
Then the defendent is entitled to punitive damages for your making them take you to court. You don't even have to go as far as most tenent laws go. You could allow for a loosing defendent to argue that there defense was reasonable, (or reasonable given evidence available to them at the time), and that they should therefore not owe punitive damages.
Of course, this still is only tangentially related to insurance.
But there are already additional costs the insurance company would bear if it went to court, which is why they will mostly settle if there is any substantial evidence (like a police report) and even a shadow of a threat of legal action, including—but not limited to—an insurance company on the other side. Neither that nor any additional weight you give the police report that requires going to court alters the calculus at all when the liable party (whether or not they have an insurance company as their agent) is certain you won't take that step.
How would that even be defined? Is it just based on the balance of evidence available? We already have something for this. If one party is really obviously guilty, then the other party can call for a summary judgement and skip much of the expensive trial.
> How would that even be defined?
That depends on how claiment friendly you want to be.
The key piece would be: "based on what the defendant knew when they refused the request for payment". Standard evidenciary rules apply for showing that the defendant knew something. In this case, the key evidence would be a police report and pictures sent to the insurance company, so I don't think there would typically be a dispute here.
The harder part is defining "ought". Courts already have a reasonable person test they apply to other situations. You could also apply the clear and convincing evidence standard to the applicable evidence (or, if you really wanted to, either preponderance or beyond a reasonable doubt).
The real answer is that in this hypothetical the legislature would pass a law, and then the appellate courts will spend decades clarifying the law until the legislature changes it again.
Imagine if murder cases were only prosecuted if the family had funds to investigate, and they only got refunded if the murder were proven.
Vehicular crimes obviously don't depend on either a victim or the victim choosing to take legal action for the offense, OTOH, wrongful death, the civil cause of action parallel to murder and other criminal homicide offenses...has exactly the same requirement as any other tort that someone has to file suit.
To the extent there is a criminal or other public offense (traffic infractions may or may not be strictly criminal depending on state law) involved in the accident, that would have been pursued without the victim lifting a finger as a consequence of the police report, just like murder investigations.
I think this might be at the heart of it.
The article (about how hard actuarial math is) and the insurance buyers make the mistake of thinking that all that matters is downside in case of event X with particular probability P. However, instead you have to think about chances of X AND chances of being able to navigate a system that is outright adversarial to parties that are not the insurance companies.
The “house” always wins…
Are people going through and calculating the expected utility of purchasing insurance, and that calculation is being thrown off by counterparty risk, leading them to buy insurance they wouldn't have bought? I doubt it.
>The “house” always wins…
is there an expectation otherwise? You buy insurance to protect against risks, not because you think it's a positive expected value investment.
But that's the thing. The other driver was only declared "at fault" by the police report, which might hold some weight, but isn't the final say.
>but police reports should probably carry some weight without requiring a suit.
what would that entail?
Seems clear to me he's upset the other driver's liability insurance isn't covering the accident in a case where law enforcement and others see clear liability for that other driver, and other driver's insurer's reasons seem to more or less amount to "you haven't legally compelled me to pay yet, and probably won't."
So? Law enforcement officer's testimony isn't a court judgement. You can't seriously expect anyone to pay you if all you have is some testimony[1] that they owe you money.
Testimony is worthless until it is admitted into evidence in court. Keep that in mind and you expectations will be in line with the harsh realities, and then you won't be confused and disappointed about the outcomes.
[1] Testimony, even from a LEO, isn't a fact. During a matter in court, testimony that concludes that one party is at fault may be disputed by testimony that concludes that the other party (or no one at all) was at fault. In auto accidents it is not unusual for a court to decide that the liability is shared between the parties (50/50, 70/30, etc) - "Sure, the other guy swerved into you, and he really should have checked his blind-spot before performing the lane-change, but should you have really been overtaking in the slow lane? He should have checked his blind-spot, but you should have not accelerated into his blind spot in the first place."
A friend of mine had the same experience from the other side. She ran into some guy's car, apologised for her mistake and told him not to worry because she was fully covered. The first sign that something wasn't right was when a summons to appear at the magistrate's court appeared in the letter box.
She asked the insurance company what was going on and they said "just send the paper work to us and don't worry, we'll take care of it".
Then she got a knock on the door from a pair of court-appointed officers who were there to discuss her financial situation and assist her in arranging a payment plan to pay off her fine. Her insurance company had not sent a representative to the trial, so the magistrate found in favour of the only party that had turned up.
After some screaming on the phone, the insurance company paid the full amount of the judgement.
Any judge worth his salt will understand the global implications (courts clogged with litigants, inability of poor people to use cars) if insurance companies stonewall when their client is at fault, whatever the odd lot who comment in HN think. The judge should hit the other party.
Bear in mind that this is a matter of public interest and romwell has not signed an NDA. S/He should name that insurance company!
What judge?
The whole scenario is around a party who was not willing to go to court. There's no judge involved.
The judge will know that the other driver's insurance will ultimately pay, so he can punish the insurance company for its intransigence by putting a heavy financial penalty onto the other driver.
Yes, that's how you formally sue in an accident. It's not the hack you think it is, though, the insurance company defends the lawsuit, that's part of the insurance agreement.
It's also specifically what OP was unwilling to do which resulted in the insurance company not paying, and why any “the judge should...” is missing the point. If there was even the slightest expectation there would be a judge, the insurance company would have likely paid without batting an eye.
And often just filing is enough for them to do the math and just pay out.
Sure, it’s not fair, but that’s why we have courts in the first place.
Which, given that the OP resides in California and was unwilling to pursue legal action in Texas because of inconvenience, isn't really helpful.
> And often just filing is enough for them to do the math and just pay out.
Yes, even just hinting at willingness to file a claim probably would have gotten the insurance company to settle in this case. That’s been the whole argument from the beginning.
Okay, I'm confused. My anecdote, which comes from Australia, indicates a 100% expectation of a judge. Are you saying that in Texas, a $US6K matter is likely to be considered too vexatious/trivial to receive a trial?
Or is it actually possible to decline a lawsuit in the USA?
This is an "explain it to me like I'm five years old" moment. I really don't know what you guys are talking about.
His point is that the OP (ie. https://news.ycombinator.com/item?id=29719047) is refusing to sue, so there's no case to bring before a court. Everything else is irrelevant. Even if you'll obviously win, but you don't sue, it's not the state's job to file lawsuits for you.
As I read it, the teller of this story was unwilling to go to court, not even small-claims. If the justice system is not brought into the picture you can't seriously expect anyone to take claims of "you owe me money" seriously.
What do you call someone who victimizes people he know have a disadvantage in suing him?
A for-profit business.
Sure, unequal, wealth-gated practical access to the courts is a real problem, and it impacts basically every area of American society.
But it doesn't make mandatory auto liability insurance a scam, any more than it makes literally every commercial industry a scam.
Looking back, the original post's comment on that point was a final aside that was ambiguous. But my defense is of the charitable interpretation of that remark. Any auto liability insurance system should be written to avoid that kind of gaming.
Seems like it's working as intended? The purpose of auto liability insurance is to... insure the policyholder from liability. If you're not the policyholder, it's not working for you. If you're a policy and you're not experiencing losses stemming from your liability (ie. you crashed your own car), it's not covered. Others in this thread seem to think it's a general purpose mechanism for making all parties involved whole, which is a misunderstanding.
Your comment is like saying “yeah that corporation used a natural pond as a toxic waste dump, so what? Corporations are supposed to make a profit, right?” Yes, they are … subject to other social desiderata like respecting others’ rights.
You seem to be attached to some bizarre strawman that the OP was expecting his own liability to cover the other party’s faults. That was never the argument.
That's not auto insurance that's the underlying legal system, and it's not the feature of the underlying legal system that mandatory liability insurance exists to address.
The intent of mandatory liability insurance is to fix a specific problem: a liable party might not have the resources to pay even a moderate damage claim if found liable. That's what mandatory liability insurance exists to address. That is the whole intent.
If you want to fix the “problem” that people aren't incentivized to proactively pay expected liabilities even when there is a clear indication that the party to whom they would be owed is not willing to pursue them in court, well, you are certainly free to propose a solution, though I don’t expect that there is one that doesn't have more adverse effects than benefits. And, in any case, that's not what mandatory auto liability insurance is designed to address.
This seems to be based on the "making all parties whole" interpretation of insurance, rather than "protect the policyholder". Are you ignoring my prior comment entirely? Are you trying to argue that insurance companies ought to have a "making all parties whole" imperative rather than a "protect the policyholder" imperative? Or perhaps you take issue with insurance companies reneging on their obligations?
It seems like from the rest of your comment that you take issue with the latter, rather than the former. My response to that would be: I agree reneging on obligations in general is bad. However, even you seem to agree that there's some room for dispute, hence why answer was qualified with "obviously at fault". Other commenters have suggested somehow punishing insurance companies in cases where they're "obviously at fault" and refuse to pay up. However, the trouble then becomes, what counts as "obviously at fault"? I have not received a satisfactory answer for that https://news.ycombinator.com/item?id=29720344.
No, you’re ignoring the three comments I’ve made now that clearly indicated I was talking about “the structuring of the insurance system” (rather than the OP’s liability policy), and continuing to argue against something you should be aware I’m not endorsing.
And yes, making victims whole is the purpose of mandating liability coverage for drivers.
Can I ask what you think your comment is adding to the discussion that it didn’t have before?
Yes, agreed, but you aren't a victim until a court issues a judgement that you are, hence the other parties insurance has no reason nor obligation to make you whole.
A dispute is just a dispute until a court rules on it. Statements made by LEOs and witnesses are only examined when it is presented before a court. If you don't present your argument before a court, you are not automatically in the right.
Really it’s just they’re used to someone else doing all the hard work and don’t want to shell out or expend effort for when something doesn’t go smoothly.
Having dealt with contractors and others who decided doing what they were supposed too was clearly too hard (and then making them do it or deal with the consequences), it’s just how life is. Some people will make you make them, because most people are too busy or distracted to do it, and they usually get off Scott free.
It sucks, but it is what it is.
The original comment seemed to be complaining that no one was pushing the button for them, and the other side wasn’t just doing something without them pushing the button.
Well duh.
You have to play the game to get compensated unfortunately. The lawyers and chiropractor know how to do the dance. Most people just get discouraged by the offending insurance compay and take it in the ass. You should be paid for your time talking to lawyers and going to get massages and dealing with all the logistics of repair, inconvenience of the accident etc.
"They can" because you let them... most people don't value their time and do the the same. Great business, insurance.
Another way of looking at it is that you could recover all of the money you have ever paid out for auto insurance in one settlement--zeroing out your contribution to the scam.
Grind them into dust for every last penny you can pry out of their hands because they do the same to you and all of us. Forget the propaganda about "raising everyone else's rates." That's a joke. This is an industry that punishes loyal customers by raising rates every year until you notice. Then they hope you leave. They are very sensitive about people shopping around each year and always talk about discounts for people who were at their last insurance company for x consecutive years. Scam indeed.
Also, this is why auto insurance offers uninsured & underinsured riders (add ons). There’s no guarantee that some jackass who hits your car will have enough insurance or any insurance at all.
Source: was an insurance agent
Here in New Zealand there is a court process that is cheap and fairly efficient for low value claims. This sort of thing would probably sneak into that category.
And the idea is you sue and when they get served they just settle as it’s cheaper.
Shouldn‘t the other driver pay you personally?
And then he‘d have to hash out whether his insurance pays him that money?
If rando-joe you go to the other insurance company...yeah, of course they'll tell you "we investigated our client and found we don't have to pay you" because they're very much hoping you'll say "well shoot then" and go away.
The other option is to have an attorney do it. With multiple witnesses and video footage, it's a slam-dunk case unless the driver's identity can't be established. That means a)an attorney is happy to take it on and b)the other insurance company will likely cave well before anyone even starts talking about court cases.
> Shouldn‘t the other driver pay you personally?
That still means the burden is on OP to sue the other driver since their insurance company was not paid to represent them in this type of case.
You don't need collision coverage to cover collisions that are the fault of other drivers -- just uninsured motorist coverage.
Well, yeah, you didn't legally establish any liability, or even, apparently, make even the suggestion of the intent to do so.
Insurance companies, being for-profit entities, aren't in the business of giving out gifts.
> Now, if I had comprehensive coverage, they'd be facing my insurance company
Yes, dealing with other driver's insurance companies (along with uninsured drivers) is among the more significant reasons to carry more than liability coverage.
> The whole thing is a scam.
I don't see a scam anywhere.
Police reports are evidence that can support a finding of liability, but they are not a legal establishment of liability. There are very good reasons (the due process clause of the 14th Amendment comes to mind) why that should be the case, it's not a scam..
> Throwing ones hands up to say "well, of -course- the company is going to avoid paying anything out unless taken to a court of law" is to abdicate corporations of all responsibility other than profit making.
Untrue. The corporation here has other responsibilities, but they are all to their paying customer.
They have the opposite responsibility, if anything... They have a fiduciary duty to their shareholders, and considering that the behavior being suggested here would see them quickly run out of business by their less-moral competition, it would probably be a breach of that duty.
The solution is to change laws about redress. For example, statutory punitive damages and attorneys' fees in lawsuits against insurers where the final judgement is significantly different from the insurer's initial offer.
Talk about what is ethical is idle because that simply does not drive corporate behavior.
1. I you're supposed to have negotiated with the counterparty in good faith prior to a lawsuit. If not, that will be looked negatively by the judge. https://www.sbwllp.com/rule-68-offers-of-judgment/
2. This probably doesn't play well with probabilities/statistics. Suppose we accept your proposal, and say any final judgement that's 5x larger than the offered settlement should be hit with extra damages. Now a lawsuit comes along that the insurance company thinks there's a 12.5% chance of winning, and if they win, the damages awarded will realistically be $1M. Based on expected value calculated from the previous facts, and factoring in court/attorney's fees, the insurance company offers the plaintiffs $150k to settle. That seems like a good offer for all parties involved. However, if the plaintiff gets greedy, and on the off chance he wins, the insurance company will have to pay extra damages, because from an initial offer to final judgement perspective the disparity is huge.
Regarding Part 2, I actually don't see the problem. If the result is causing insurance companies to be more cautious about lowball offers when there's a range of reasonable outcomes, is that bad? The plaintiff still must succeed at proving damages, so it's not like that outcome is unforseeable.
It does increase "settlement risk" for insurers, but _they're insurers_. Of every kind of entity out there they should be the most comfortable with risk. The greater risk of unfavorable settlements would obviously increase insurance premiums, but if premiums increase because insurers are actually paying more in fair settlements and/or punitive judgements because they failed to pay a fair settlement, again I cannot see the problem.
But the problem is that in the example I given, the lowball option is fair given the probabilities/expected value.
Citation please.
https://www.nolo.com/legal-encyclopedia/fiduciary-responsibi....
My apologies.
Being on the shitty end of the stick, of course the poster sees what is happening. But until a judge or impartial third party with some pull sees it, it might as well not exist. And that’s hard.
They are telling the government they will pay out if the insured party is at fault for an accident, but in some (many?) cases they don't actually pay out. That sounds like a scam to me.
No, they aren't.
They are telling the government and their customer they will pay out if the insured party is found to be legally liable for injury or property damage while driving. (That is, in exactly the situations where the customer would legally be obligated to pay.)
They are also telling their customer that they will defend them from such claims to the extent reasonable, settling where it makes sense to contain liability. That is actually a big part of why one would pay for insurance rather than posting a liability bond (as most states allow) unless you have the funds to keep a general attorney on retainer and seek task-specific representation as needed.
Had they paid out when there was no expectation you would establish liability, that would be a scam against their paying customer.
A police report doesn’t establish proof of fault. Neither does a video. Neither does eye witnesses. All of those are evidence of fault, but not legal proof of fault.
And its not “cheap” to not get comprehensive insurance. Its a calculated risk.
As somewhat of an aside, since I think a lot of people don't realize this: Most of the time attempting to allocate blame in auto accidents is a massive waste of resources and time. Insurance companies usually just settle with each other before even getting to court unless the claim involves big $. Even if you were 0% at fault, your insurance company is still incurring some cost to process the claim. Their assessment of your risk is still going up (as it should). They're still going to up your premium. The whole fault concept is just not helpful to the actual functioning of the industry, most of the time. In some states they just got rid of fault altogether, for exactly this reason.
> And its not “cheap” to not get comprehensive insurance. Its a calculated risk.
Yeah, a risk that in this case, did not pay off. So why is this guy whining all over this thread that he got "scammed" when he knew it was a risk?
Because the "other party is 100% at fault" is actually determined by courts, rather than the cops, hence the need for lawsuit.
Real estate agent checking in here... I agree with you, but there's always a but... the problem is that there really are situations where there's a cloud on title or where title is questionable. This doesn't mean there's anything nefarious going on, and it also often isn't a question of history (IE: title recorded on parchment or something). It also seems to me that some states are just better at maintaining good title records over others - and again, I'm not convinced this is directly related to the timespan of recorded history.
So the problem then is an 80/20 or a 99/1 thing... 90+ % of properties the title insurance is going to be a waste of money. But in those few cases, it really could make a difference. Since the amount of money involved is usually quite small, especially relative to the size of the transaction, it becomes really hard to change the system.
I'm actually in a transaction right now where the title history is weird and questionable. Will the insurance be a factor? Probably not, ironically, but it's exactly the kind of scenario for which this kind of thing exists.
* the disclosures show two slightly different figures for the dimensions of the lot, which one is it? (County mapped shows Width W and another owner provided map showed W-1ft or something like that)
Instead of doing anything to try to figure it out, this title insurance company (also doing escrow) lowered the tier of title insurance they were willing to provide LOL
Because this was a material change, once they saw we wouldn’t go through with the transaction without the best coverage they changed their minds about and said that they’d title insure at the highest level… but only once we pushed them on it…
Nobody did any more work to settle the question than us, who went to the house and measured to determine which dimension was right…
As much as I love my clients... there are very few who are "easy" in the same way that there are very few "normal" transactions - this is where Zillow et. al. just don't understand the realities of real estate.
As I and the parent poster were discussing, the consumers are not being protected. Every single player is just compartmentalizing the areas in which they cover their ass. As a customer I am not being protected - I'm on the hook if anything goes wrong, and nobody actually goes out of their way to check if anything is wrong, as long as the documents look generally like what they are used to.
I will respectfully disagree with you about the fees. I understand the value prop of everyone in the value chain; in HCOL markets their prices are not justifiable and are ripe for disruption (and to be fair in LCOL markets there's no problem with the pricing). This is where vertical integration has a lot of potential.
I expected Zillow to come up. Zillow made a pretty fundamental mistake of introducing a house flipping business on top of their services business; even if they had perfect models that made their flipping business a success, I don't think the two could coexist for long because holding property is so fundamentally different from services. As far as their original business, I think they and Redfin and others "understand the realities of real estate" perfectly well; they are just up against a cartel that would be illegal in most other industries.
Happy to chat - my email can be reached from my profile
A vendor agent’s financial incentive is to sell as quickly as possible, and spend as little time as possible on the sale. Successful vendor agents are very good at convincing vendors that they should sell, quickly. They have a variety of strategies, and vendors are easily convinced they got good value, since successful agents are good at marketing a narrative (and the vendor wants to believe they got a good deal).
Let’s say a successful agent sells 50 houses as quickly as possible. Another more honest agent works to get the best price, which takes them twice the time, so the honest agent only sell 25 houses. The commissions from selling 25 houses nets the honest agent approximately half the profit compared to the successful agent selling 50 houses at lower prices.
Financial incentives really do influence most agents, even if they are not so aware of how they have been influenced by other agents to sell quickly.
For example, if you go to a doctor who's not in your health insurer's network, you're probably not covered. In some states, you can buy a "full coverage" (liability + comprehensive + collision) policy with a liability limit of $10k, so if you hit someone with your car and they have more than $10k in medical bills they can sue you for the balance. Your provider network and liability limit will both be spelled out explicitly in your policy documents, and neither concept is really that complicated, but if you don't know about them you could be in for a nasty surprise.
Of course, all of that creates a giant pain in the ass for consumers, and that begs the question, why doesn't anyone just make an insurance policy that covers everything the policyholder thinks is covered? And the answer is that nobody would buy it! It would be more expensive (usually much more expensive) than its competitors, and people are generally very price-sensitive in their insurance purchases, and no one would read the fine print to see what they're actually getting for their money.
P.S. The rabbit hole of stupid insurance regulation runs deep. Texas county mutuals are a fun example. Captive reinsurers are another.
Otherwise, it's just an income-generating scheme for private parties.
Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is.
How do I know? Got told that after getting into an accident on a road trip. So much for a good thing.
The free market is required to accurately price the risk for each driver.
A 45 year old female driver with no infractions is much less risk than an 18 year old male with a DUI, so the former should pay less in premiums. The current system is doing that.
I do not see how a state-provided solution would come up with "accurate" pricing for individuals. Some market is needed.
I could see how some people (especially in high risk groups) would prefer not to pay according to their risk, but I do not agree that is better for society.
What I’ve seen in places that have government insurance is the government is constantly trying to backstop the insurance.
Why? It becomes a political hot potato when rates go up, so there is pressure to keep them down with lower premiums. The insurance body doesn’t care because the government will bail them out.
(If you had them directly pay for the damage they caused, that wouldn't be insurance, that would be a middle man for restitution.)
I think my point is pretty clear without me coming up with a precise formula: instead of predicting rates, just adjust them based on history instead. After all, someone likely to cause repeated damage in the future is also likely to have caused it in the past.
The only major difference between the two approaches is that mine doesn't require someone to make predictions - which might be biased - in exchange for mine maybe under-charging someone with no negative history who is about to cause a huge amount of damage and then stop paying into the system (death, etc). But in those (rare?) cases, the fact that everyone is part of the system means that the single rare loss is amortized nicely and without bias.
But by how much? If it's enough to fully offset the cost of the damage, that's not insurance, but a payment plan. If it's less than the cost of the damage, then you have to decide what it's going to be.
You can calculate using any history you like. Weigh past damages based on time between, or time in the past. Be creative.
That same market means some will decide that not having insurance is a better deal. Tying insurance to something like drivers licences increases the cost of not having insurance.
>I do not see how a state-provided solution would come up with "accurate" pricing for individuals.
Can the state not hire actuaries?
yes, but a sibling commenter has weighed in how it turns out: https://news.ycombinator.com/item?id=29719762
My experience in other provinces with private insurance companies was much better.
Private insurers can say "fuck no, we're not insuring you, you've got 2 DUIs, 6 speeding tickets, and numerous equipment violations" or make the cost of that insurance absurdly expensive, pricing them out.
If the government is providing the insurance, they likely have to say "yes" to everyone. Waiving the requirement to insure everyone is well and good until someone looks at the data and sees that your completely non-discriminatory rules are effectively discriminating against certain classes of people.
Good drivers subsidizing bad ones is the entire concept of an insurance pool. The corrective mechanism is that if a driver reveals themselves to be bad enough, you make them stop driving.
This would require a way to measure driving quality with perfect accuracy and no errors. I feel comfortable in my claim that (1) nobody can do this; (2) nobody claims to be able to do this; and (3) nobody believes that this might one day be possible.
Differing premium rates just mean that you have several pools, each defined by their premium rate, in which the better drivers subsidize the worse ones.
It's probably true that, technically, liability insurance is only available once the driver loses in court, but that means very different things than it implies. For one, the driver has no knowledge of the court case, in many situations. The insurance companies work with one another to figure out who is paying what, and the insured is largely uninvolved.
You can "be told" many things about a system you're unfamiliar with that sound, on their face, absurd, but upon inspection actually make plenty of sense. This sounds like one of those things.
It's not, even in theory, in most places, though. It's just a convenient option to a liability bond that most drivers choose.
> Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is.
Well, yeah. It's liability insurance. It has to pay when a legal liability is established against the driver. That is, exactly when the driver would have to pay in the absence of insurance.
Determining legal liability is what we have courts for, not police. The cops doing the courts’ jobs is a phenomenally bad idea.
>Otherwise, it's just an income-generating scheme for private parties.
Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"?
The answer is: yes, absolutely, and we essentially do that to some extent with food stamps and homeless shelters; but, of course, not nearly to the extend that we can and should.
Shelter isn't just "required" in scare quotes, though; it's illegal to be homeless (you can get charged with loitering, trespassing, etc. if you try living pretty much anywhere where you're not paying for it some way).
We all know that the rental market is a scam, since mortgage payments (i.e. what you pay to own the property, plus profit for the bank) is lower than the rent in most markets (sometimes even after adding property taxes on top).
We also know how zoning restrictions on construction of residential properties and high-rises artificially restricts the supply of housing precisely where it's needed: i.e. where the jobs are (Example #1: San Francisco Bay Area).
So yes, the housing market here is an incoming-generating scheme for landlords. To the extent that people joke that Silicon Valley is a machine to transfer money from venture capitalists to landlords through engineers' pockets.
Note that I am not saying that the state should be the only supplier of shelter, food, healthcare, transportation, and education. Just that it should be one of the players on the free market, with a cost of 0 (or barely above nominal).
That's how Europe does healthcare and education, and at the very least it shows that we can afford this on a grand scale.
>The answer is: yes, absolutely, and we essentially do that to some extent with food stamps and homeless shelters; but, of course, not nearly to the extend that we can and should.
The programs you described only satisfy the "provided by the state" part, not the "avoid it being an income-generating scheme for private parties" part. If you're arguing it's something like food stamps, then that calls for the state paying insurance premiums on behalf of drivers that can't afford it, not for some sort of government insurance program.
>Shelter isn't just "required" in scare quotes, though; it's illegal to be homeless (you can get charged with loitering, trespassing, etc. if you try living pretty much anywhere where you're not paying for it some way).
Sounds like it's actually required, both in the sense that in certain areas if you don't have shelter you'll freeze to death, and in the sense that you need somewhere to sleep. The fact that you can get a place to sleep by violating other people's property rights, or commandeering communal resources for your own needs (ie. camping on the sidewalk or public parks) doesn't mean shelter isn't required. You can plausibly feed yourself by stealing from farm fields across america, that doesn't mean food isn't required.
>We all know that the rental market is a scam, since mortgage payments (i.e. what you pay to own the property, plus profit for the bank) is lower than the rent in most markets (sometimes even after adding property taxes on top).
1. source for this? in the hottest markets at least, price to rent ratios are so insane that the only way landlords are making money is through appreciation
2. you forgot to factor in maintenance, and cost of capital
3. the fact that there's a better deal doesn't mean it's a scam. the fact that costco sells 96-roll pack of toilet paper, doesn't mean that the 6-roll pack they sell at regular grocery stores is a "scam". The same applies to rentals. They offer flexibility compared to ownership. factoring in transaction costs, buying houses isn't worth it unless you're planning to stay for years/decades.
4. it's funny you mention mortgages and how banks make profit on them. Are they a scam? surely it must be, because they're selling money to you for more than what they're buying money for (otherwise they wouldn't be making a profit)?
>Note that I am not saying that the state should be the only supplier of shelter, food, healthcare, transportation, and education. Just that it should be one of the players on the free market, with a cost of 0 (or barely above nominal).
>That's how Europe does healthcare and education, and at the very least it shows that we can afford this on a grand scale.
1. yet, even progressive region such as "europe" only does it for healthcare and education, and not shelter, food, and transportation. Why is that?
2. The US already has government provided education. have you heard of public schools and state universities? Seems like the problem with education isn't due to the government not getting involved, it's because government institutions aren't bothering to undercut private ones.
3. "europe" doesn't have a unified policy for healthcare. Yes, there are some countries where there's a healthcare system run by the government (eg. NHS in uk), and there are some that provide government insurance option in addition to private offerings (eg. germany), but there are also countries that have only have private insurance (eg. switzerland).
Side note: when the USSR held a referendum on whether it should be dissolved, most people voted to keep it (77% yes, 23% no) [1]. Things by far were not rosy in the late 80s (when a quarter of the nation votes for dissolution, things aren't great), but they weren't 30s either.
That's, of course assuming you mean the USSR/China and ignore all the other welfare states in Europe, as well as programs like foodstamps in the US.
[1] https://en.wikipedia.org/wiki/1991_Soviet_Union_referendum
Which it is in some jurisdictions, e.g., BC, Quebec. In the jurisdictions where it is done by the private sector, it is generally heavily regulated.
> Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court.
This depends on the jurisdiction: in the province of Ontario, with is a "no fault" area, there are few(er) court cases:
> Ontario has a "no-fault" car insurance system, but this does not mean that no one is at fault in an accident. The term "no-fault" insurance simply means if you are injured or your car is damaged in an accident, then you deal with your own insurance company, regardless of who is at fault. You don't have to go after the at-fault driver for compensation.
* https://mitchellandabbott.com/no-fault-insurance.php
> Essentially, no-fault insurance in Ontario is that in the event of an accident (without or without collision coverage), all drivers involved will process individual claims through their own insurance companies to get coverage for damages and injuries. It’s a system that has prioritized the claims process for drivers who need reimbursement so that the drivers aren’t kept waiting.
* https://www.ahainsurance.ca/car-insurance/no-fault-insurance...
* https://en.wikipedia.org/wiki/No-fault_insurance
There's even a specific regulation called "Fault Determination Rules" that covers the most common cases:
* https://www.ontario.ca/laws/regulation/900668
There are pros and cons for both public/government versus private insurance, and 'fault' versus no-fault insurance, regimes.
This is extraordinarily well understood in the insurance industry. They don't think of it as odd or a dirty secret, at all.
It's more surprising that he was so open about the naked corruption/nepotism in the origin story. Apparently there's a sector of society for whom that is also normal and acceptable.
> I feel like I’m self insuring when it comes to car and healthcare at least.
This is not at all the case for car insurance! You may be self-insuring the cost of your car, but are you also self-insuring against a lawsuit for damage to the other guy's car?
It's definitely more true than not for healthcare, though. Health insurance is a pretty terrible product.
In a lot of places, most people only wear seatbelt, wear a helmet, don't drink and drive, etc due to laws/regulations (and in others, they'll strongly actively fight these initiatives). We are really really REALLY bad, on average, assessing personal risks. Regulation, in part at least, is us as a society taking look at overall percentages and saying "well let's not do that".
There's a likely apocryphal story about sysadmin who was fired after event he estimated had less than 10% chance of happening, happened. Most of us assume that <50% means it won't happen, >50% means it will happen. With most events that insurance covers, most of us are aaaaawful at understanding it can ever happen to us... and we most definitely over-estimate the gracefulness, self-awareness and ownership we'll exhibit if it does help us.
I distinctly remember this from the interview as well! He simply drops it in there that he married into the family, that it’s a family run company, that the family owns some significant portion of it… “family family family”… it was an odd interview.
> but are you also self-insuring against a lawsuit for damage to the other guy's car?
I guess their insurance company is going to come after me/my insurance company to pay up… yeah without insurance I’d simply hope I could reason things out with whoever.
I’ve actually had to do that in the past. After a minor collision I asked the other driver whether we could settle things directly, and how much he’d feel was fair for me to pay to fix damage to his motorcycle. He named a figure and we drove to an ATM and I paid him that, we still exchanged info in case anything else came up but nothing did. Yes it was scary, but I think it was more efficient and less hassle in the end. This occurred in Los Angeles.
What's the alternative?
If you are an alcoholic with a history of OWI/DUIs and you have a pre-existing car accident and no job, no one expects you to get free car insurance paid for by the government that will fix your already damaged car and make sure you can drive again as a human right.
In Healthcare, we assume that product should exist and we demand that it be called insurance for some reason.
The alternative to health insurance is free Healthcare. It isn't insurance at all.
In my mind, the alternative to health insurance is paying market rates out of your pocket for everything. It's not a good idea and that's why most of the countries have universal health insurance coverage.
Or a hybrid system with Medicare for all with income limits, above which you must either get third party insurance or pay a small tax is how it was done in Australia last time I was there. It seemed to work well when I was there, and I did have need of it. I had to go to the ER when I was peeing blood after being kicked by a horse directly in the kidney. Fortunately there were no blood clots and it passed after a day or two, but they had to do tests to verify it all and also an MRI I believe. I never got a bill.
I had more medical expenses from mandatory screening fees for visa applications there than from a potentially life threatening medical emergency. And it was included in my yearly taxes with no fees at the point of usage for anything I can remember offhand.
Meds were cheap because the whole country’s Medicare board bargains with the pharmaceutical companies directly, and if your meds are too expensive, they will just go with a competitor and leave that vendor out of the Medicare coverage schedule. This is not unequivocally a good thing, but those meds are still available on the market, but you will pay more for them unless you have third party coverage. Generics are also available just like most places.
Not sure if it’s changed since, as that was like 15 years ago.
Medicare in Australia: https://www.health.gov.au/health-topics/medicare
> Medicare is Australia’s universal health insurance scheme. It guarantees all Australians (and some overseas visitors) access to a wide range of health and hospital services at low or no cost.
Medicare in Canada: https://www.canada.ca/en/health-canada/services/canada-healt...
> Medicare is a term that refers to Canada's publicly funded health care system. Instead of having a single national plan, we have 13 provincial and territorial health care insurance plans. Under this system, all Canadian residents have reasonable access to medically necessary hospital and physician services without paying out-of-pocket.
Hope you're feeling better now. That kidney kick must have been hell of a painful one.
I still feel bad for the horse. It got spooked, and was entirely blameless, if a bit anxious. It was a windy day, and the tin roofs of the surrounding buildings set the horse off somehow. I had too much slack in the lead rope, the horse walked ahead just far enough away for me to be in the danger zone right behind. I saw a motion blur of horseflesh, reflexively covered my face, and took a rear hoof right below my ribs. I almost kept my grip on the rope, but some part of my mind decided to let the horse win this one, and I dropped it right as my legs gave out from the impact and the sudden pain. The horse ran, and trampled it’s own rope, broke the bit in its mouth. The poor thing’s tongue was cut top to bottom, and halfway across.
I failed the horse in my careless handling and lack of empathy and situational awareness on that day. As these were racehorses, I’m glad that they received medical care and made a full recovery after missing some races. On balance, maybe the horse got off easy compared to how hard they run them on race days.
That was the worst experience I had with a horse. The second worse was being lifted off the ground by my bicep by a mother horse when I calmly petted her daughter. And the younger horse was nearly as big as her, so not a baby by any means.
Horses are to be respected. All animals ought to be; doubly so for those that can literally trample you to death.
To go on: After birth it would also be considered child abuse to avoid taking a severely sick child to the doctor, which practically makes "choosing" to avoid healthcare illegal. For those who may never get sick? Healthcare is not a choice if it relies on extreme fortune to avoid it. People mostly end up needing doctors for things beyond their control. Relying on unassisted home birth followed by odds defying luck in never getting severely sick up and until the moment you die of a massive instantly fatal heart attack or something similar? That is not a choice.
This makes it hard to determine if you are hairsplitting for the sake of it or genuinely arguing for healthcare as a choice people can make. If it's the later, you're making a spurious argument from the potential for statistical anomalies.
Insurance is fantastic for personal liability, title insurance, health insurance when you consider the low probability of event ruining you financially.
In terms of helping with regularly occurring costs? No they are terrible.
I've always been happy with renter's insurance and have paid it since my first apartment in college. I pay $100/yr for a 50k limit policy. Unlike car insurance I am not required to have this, but I've always considered it to be worth it.
I also pay for pet insurance. Again, not required to have it but when I considered cancelling and self-insuring I filed a claim and was immediately paid out hassle free. That convinced me to keep it.
Don't get rid of it, the cost of healthcare for pets is quickly reaching the cost of healthcare for humans.
Are they different drugs?
Rental insurance paid me $3k when I had my backpack stolen in Belgium. This easily paid for 3 decades of insurance and, realistically, I think most people are likely to be the victims of theft at some point over a three decade period.
My theory is that the way they make this work economically is that many people aren't willing to go through the hassle of record-keeping and filing a police report to get payouts. (In practice, this took less than 1 hour of my time total.)
Have you had to get anything paid out from renters insurance?
Pet insurance seems like a great business to be in… is there anything that requires you to actually have pet insurance? Would it cover costs from your pet hurting someone else? Or is it more to cover pet health costs? Really curious to know the ways it’s similar or not to US human health insurance hah
Pet insurance is only for emergency and/or life-threatening injuries and conditions, and surgeries and other costs related to them. Think getting hit by a car or getting cancer. It doesn't cover vaccinations, annual visits, and tests done for preventative measures. This is the main difference between pet insurance and US human health insurance since if I understand correctly, most (all?) medical plans offered in the US are required to provide preventative coverage for annual visits, vaccinations, etc.
My pets are young and healthy so 100% of their medical costs are preventative which made me consider cancelling my policy. For reference I pay $65/mo for my policy which covers three pets. In my area an annual exam and vaccination series for the three pets costs $300 so about 2/3rds of my annual pet medical expenses is "wasted" on premiums. But a minor accident that could happen to any pet ended up costing more than a year's worth of premiums and it was nearly 100% covered by insurance without a deductible applying.
I've still paid more in premiums than I've gotten back (which is obvious; how else does the insurance make a profit?). I was considering self-insuring instead by taking the money I was spending on premiums and putting it into a savings account. After doing some research on emergency procedures I realized that in some rare circumstances a single injury could cost a decade of premiums. If this happened multiple times I'd have to make a tough decision to put down the pet simply because I couldn't afford the procedure. These pets didn't ask to be brought into this world and are often abused and neglected before becoming adopted. They deserve a long and healthy life if one is possible. I'd rather "waste" a few hundred dollars a year for the peace of mind that I can afford to treat any illness or injury that occurs.
Similarly, you are only required to have auto insurance for the damage you may cause to others. The only time you are required to insure the value of your car is when you have a loan since the lender is putting up the money/risk.
There are many great examples of when to purchase insurance and many terrible examples (phone insurance comes to mind). I would argue that much of the problem stems from people not being educated on exactly what coverage levels they’re buying.
Our cars are fully paid for, and I’m operating under the assumption that it’s possible and for them to lose their whole value and I’d have to get a new car.
Covering remaining damage to myself seems to turn into a health insurance event (I.e. how to cover medical costs) akin to suffering from cancer or another high cost illness.
For both of those it’s expected that I’ll have to tap the piggy bank…
Beyond that, the most dangerous scenario to guard against (if I don’t die) would be something that impairs my ability to continue to be employed, so I do pay for AD&E insurance… I’d hope they would come through, but I’m sure they find their ways to avoid payouts.
Perhaps this matters if I felt like they’d harmed me enough to warrant trying to take them to court. In those cases though, it seems like I’d be handling higher order issues like actually trying to stay alive or recovering enough to get back to work.
>For both of those it’s expected that I’ll have to tap the piggy bank…
But is that just? Why should you have to pay the costs (both medical costs and costs from suffering/loss of income) because of a wrong that someone else inflicted? Even if you bought good insurance and are relatively well protected against such events, what about people who aren't well insured?
As for title insurance, there's no way I'd buy a house for cash without title insurance to make sure I'll actually own it, and I don't blame the banks for insisting on the same.
If you mess up in your car, and kill someone or turn them into a quadriplegic so they need a 24/7 nurse, do you have the several million that it would take to 'pay off' the victims for the suffering you caused?
The most important part of auto insurance is not the cost of fixing/replacing any cars involved in a crash, but the liability component.
I guess this is 2021 so...something something... blockchain...?
It’s far more than “who actual owns this parcel of land”.
Meanwhile, title insurance isn't legally required. It's required by your mortgage company to protect their money.
It blew my mind at how candid he was about the fact that his business exists due to regulatory mandates. Are there insurance products that people are really satisfied with and trust will pay out in case of event X? I feel like I’m self insuring when it comes to car and healthcare at least. Title insurance when buying a house also seemed like a total “legally required” joke.
[1] https://ritholtz.com/2021/11/transcript-thomas-gayner/