Increasing The Liability Minimum Coverage

By Author: Marcus Stalder
Total Articles: 491
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Go back fifty years, America was very different. This was a country in which our lawmakers could confidently pass financial responsibility laws, knowing we would all accept the need. As the economy began its steady expansion after the end of the World War II, therer was the explosion in the number of vehicles on our roads. With technology still developing, suspension systems and brakes were primitive, so there were a rising number of accidents. States decided to mandate every driver to carry a minimum amount of insurance. Back then, almost all states were at-fault, i.e. they relied on the courts to apply the law of tort. Any driver found negligent would be responsible for paying the cost of all repairs and medical treatment. Since not everyone carried such large sums in their bank accounts, everyone carried liability insurance. That way there would always be some money available to pay whoever you injured by your bad driving. Even though some states have changed to no-fault insurance, the reasoning stays the same. Even though you are insuring yourself, it's still better to have the money from the insurer than be forced to go ...
... even further into debt to pay for your own treatment and vehicle repairs.

In other countries where similar laws apply, there are provisions to increase the minimum amounts in line with inflation. That way, there's always enough money to pay for most, if not all, the repairs and treatment. Put another way, lawmakers who thought the law a good idea, thought it an equally good idea to keep the value up-to-date. But not in our country. Our lawmakers made their laws in fixed amounts. The result is rather alarming. If you take $1 in 1960, it would take $7 in today's currency for the same buying power. Now think about a mandatory minimum of $15,000 for medical expenses set in 1960. That should be $105,000 today and, even that amount would struggle to pay for anything more than routine treatment for relatively minor injuries. Yet when lawmakers debate increasing the mandatory minimums today, no one talk about even doubling the old values. The brave representatives talk carefully about ten or twenty percent increases, and duck for cover when the howls of outrage come from their electors.

Auto insurance quotes for the mandatory minimums have been rising faster than the rate of inflation because an increasingly large percentage of drivers now fail to insure. With fewer drivers sharing the total cost of loss, the premium rates must rise. This produces an ironic result. Because more people refuse to pay higher premiums, the premiums rise. When the premium rates rise, more drivers refuse to pay. This leaves us with about 20% of drivers uninsured and the majority underinsured. If you have the money to pay the premiums, everyone now buys uninsured/underinsured coverage. With no sign of effective enforcement for the mandated coverage, the number of uninsured drivers will continue to rise and the auto insurance quotes for the law-abiding will continue to rise. In such times, no one will talk about increasing the minimum amounts for liability coverage.