The 'scam' seems to be insofar as wealthy and powerful entities can exploit the functional inability of those less wealthy and powerful to meet them on even terms in the legal system. I think we could all agree that in an ideal world if someone is at fault, their insurance should pay out to those they damaged. The reality is that may only happen if you have an entity of similar magnitude to go to bat for you.

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.

> The 'scam' seems to be insofar as wealthy and powerful entities can exploit the functional inability of those less wealthy and powerful to meet them on even terms in the legal system.

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.

> 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.

What you propose is additional weight that does require going to court, basically additional incentive to settle if it is reasonably perceived the other party will take the case to court.

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.

>3) Ought to have known you were liable

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.

Summary judgement applies when the facts not in dispute are sufficient to reach a legal conclusion. If there is a material dispute of facts, no matter how obvious the evidence is, it must go to trial. Further, summary judgement only reduces the cost (for both sides); it does nothing to act as a deterent.

> 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.

That doesn't seem reasonable. Whoever is liable should pay, there shouldn't be a little game where you can avoid paying because it will cost the other guy too much.

Imagine if murder cases were only prosecuted if the family had funds to investigate, and they only got refunded if the murder were proven.

> 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.

> If you aren't willing to sue over a disputed liability, it might as well not exist.

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…

>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.

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.

Yes, the expectation was that the risks are those you bought insurance for. Additional protection against being bullied by other insurance companies is not obvious.

>I think we could all agree that in an ideal world if someone is at fault

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?

> You choose to drive with only liabilty insurance, and are upset that insurance didn't cover an accident when you had no liability.

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."

> 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,

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."

> The public policy motivation for liability insurance is to protect the lawsuit route.

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!

> The judge should hit the other party.

What judge?

The whole scenario is around a party who was not willing to go to court. There's no judge involved.

The appropriate course is to sue the other driver directly and ignore the insurance company. A person cannot ignore a court summons, not even in Texas.

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.

> The appropriate course is to sue the other driver directly and ignore the insurance company.

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.

Lawyers can’t represent clients in some small claims courts.

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.

> Lawyers can’t represent clients in some small claims courts.

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.

> If there was even the slightest expectation there would be a judge,

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.

>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?

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.

> The appropriate course is to sue the other driver directly and ignore the insurance company. A person cannot ignore a court summons, not even in Texas.

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.

No, he’s (reasonably) upset that the other side’s insurance did not pay out when it was clearly their client’s fault, banking on his difficulty of filing a lawsuit.

What do you call someone who victimizes people he know have a disadvantage in suing him?

That doesn't really seem to be an issue with insurance per se. In a world without insurance, you could still have people refusing to pay even if it's "clearly" their fault.

It is a problem with the insurance, as it would be for anyone else. Shitty tactics are not exclusive to insurance, but that doesn't negate their actions, or the expectation that they should perform better.

> 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.

The claim I was defending was that the way auto liability insurance is done is a scam, not that the concept of requiring liability insurance is 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.

>The claim I was defending was that the way auto liability insurance is done is a scam

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.

I thought I addressed exactly that in my original reply It’s not really working if and when once side is incentivized not to pay when they can and are obviously at fault.

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.

> thought I addressed exactly that in my original reply It’s not really working if and when once side is incentivized not to pay when they can and are obviously at fault.

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.

>It’s not really working if and when once side is incentivized not to pay when they can and are obviously at fault.

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.

> 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?

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?

> And yes, making victims whole is the purpose of mandating liability coverage for drivers.

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.

It seems more like the poster was complaining that actually following through was hard and a pain in the ass, therefore the game is rigged.

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.

I don't know what you think you're adding to the conversation here. The point of the auto insurance system as mandated by governments, including the "required liability" part, is to rise a bit above (or a "smidge above" as you might say) this folksy "it is what it is" nihilism.

If no one pushes the button that is provided to do anything about it, what do they expect to happen?

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.