Whatever Happened to “Pay at the Pump” Auto Insurance?
Pay at the Pump Automobile Insurance was a great idea that was brought forth in California during the 90s, combining no-fault insurance with a kind of mandatory coverage. Guess what? It was torpedoed by the insurance companies and trial lawyers
There was an idea about 20 years ago in California called “Pay at the Pump Auto Insurance”, which combined no-fault auto insurance (in which claims are paid without assigning fault) with a kind of “mandatory auto insurance” (since everyone paid a gasoline surcharge which automatically paid their auto insurance). It was a clever idea, and since other states had success with no-fault insurance (cheaper, since fewer attorneys were involved), it was solid. However, since it tended to cut out the two most powerful middlemen in our Country, Insurers and Lawyers, it was doomed to failure. The funny thing was that it might have been the first time in history that Insurers and Lawyers ever cooperated among themselves.
This idea would seem to be worth another look. What I didn’t mention was that before California passed the Mandatory Car Insurance Law in 1984, many were victims of the uninsured motorist, who often caused many accidents but didn’t have insurance to pay for the damages. Actually, this is still a problem even with the law, since there is only a spot check by police, and irresponsible drivers (often illegal aliens) can be behind the wheel creating unpaid for damage. Pay at the pump would solve that problem, as anyone who needed fuel would be assessed the cost of insurance, and all would be covered. The concept was similar to “Medicare for all” concepts (in that it reduced overall costs via buy-in from everyone, plus economy of scale). When the insurers and attorneys associations gathered to torpedo the bill, they claimed that the idea was “regressive” (costs more for people who can least afford it), since the poor supposedly had to drive more than the rich to get to their miserable jobs, paying more than the rich for car insurance, even though they supposedly had less liability (less valuable cars, less assets to protect).
The “regressive” argument merits a whole paragraph, since it has apparently been used since the beginning of time by the rich conservative corporate interests to kill any kind of user tax (gas tax, tolls, social security, etc). Of course what is really going on is that the rich make a fortune from rich person scams (ie lawsuits, high-priced insurance, fuel dependency) and create a complex web that hides this racket (weird laws, bar associations, fuel subsidies, anti-tax and pro-oil Republican lawmakers, anti-tort reform Democratic-Party lawmakers). The “regressive” argument could easily be stood on its ear, as the “poor” actually cause their fair share (or more) of accidents and should pay their fair share of liability, plus the savings from squeezing lawyers and insurers out of the picture would lower overall cost for everyone. Similar arguments, pro and con, for “Medicare for all” have been made, of which a compelling one is that simply streamlining medical care (again reducing lawyers, insurers, and paperwork) would greatly lower medical costs.
At this point in both arguments, I should go on record as saying auto and health liabilities should have a further cost limiter, a “ceiling”. In health care, the “ceiling” would be that which goes beyond reasonable cost (like experimental treatments, high liabilities, or “lost causes”). Accordingly, a good “Medicare for all” might require a tort limiter, and a $10,000 deductible major medical plan in addition to the standard plan. The nice thing about a “pay at the pump” auto insurance is that the tort limiters are built in to the plan. However, a well-off person might need to include auto in their “personal umbrella plan” (which typically includes homes and autos for catastrophic coverages of which rich people may be subjected to, like running over 50 people in their Rolls-Royce).
You may also ask “what happens if most people are driving electric cars?” and the answer might be to add an electricity surcharge to pay for the insurance. Perhaps this insurance might provide everyone with no-fault homeowner’s insurance too, since the surcharge paid would be paid for home use too (unless there was a special meter for electric car electric usage).
Doubtless, powerful attorneys and insurers will continue to fight “pay at the pump” auto insurance and no-fault concepts, so it may take a powerful grass-roots movement, followed-up by willful government bodies to enact such legislation. In looking over the Art Torres-led California plan of the mid-90s, the newspapers (and reasonable people) were for the plan, before the attorneys and insurers (strange bedfellows, as was noted at the time) began a massive misinformation ad-campaign which successfully quieted this “revolt”. Lawsuits can keep corporate America honest, and risk-sharing can lower liability cost, but lawyers and insurers run amok can be a parasitic and costly nuisance to the public.
Like this article? Read more in Vern Scott’s new book “Civil (Engineering) Disobedience”, available on Amazon.com
