If insurance is doubled, the number of sharks will, too

By Dave Millhouser

 “Isn’t your car parked in front of your apartment?” asked my buddy. I had taken a break from my highly lucrative job (digging ditches in south Florida) to drive for a former employer and was about seven states away.

Dave Millhouser

When I said “yes,” my pal said “not anymore.”

Long story short: someone had broken into the apartment, loaded all my stuff into the trunk of my beloved 1971 MG Midget, and disappeared forever.

For the uninitiated, Midgets were tiny, with a trunk about the size of a milk crate. You can probably imagine that, if all my things fit into it, I was poor.


Fortunately my dad had recommended that I maintain “comprehensive” insurance, and (gasp) I actually took his advice.

The insurance company coughed up $3,000, which was a miracle because I’d only paid $2,792 for the car. Despite the emotional scarring caused by the loss, I lived happily ever after.

Insurance can be a blessing, but as with so many things, I am of two minds (some would call it schizophrenia).

For the time being, we’ve beaten back the forces that press for higher mandatory insurance coverage for buses. A seemingly draconian solution to a nonexistent problem, you’d think it would die. The trouble with bad ideas is that they’re extraordinarily resilient.

Proponents point out that damages from a major accident could exceed current minimums. So could damages from a meteor strike. Litigants are free to go after other assets in either event (although suing the Supreme Being has some risks).

The other side of the coin is that operators are free to buy more than the minimum policy, and it might even be a good idea. If there is a significant accident, when the insurance coverage is exceeded, lawyers come after the carrier’s assets for the difference.

Buying extra insurance may save your company and even your home. I checked — they can’t take your children.

In addition, some companies have used higher coverage as a marketing tool. They point out to customers that, in the event of a tragedy, they have extra resources to help recovery. This can be very effective with schools and organizations sensitive to risk.

If extra insurance is a good thing, why not make it mandatory? As a general rule, if government gets involved in anything, its cost goes up. Education and health care leap to mind.

It’s no accident that when all sorts of money became available in the form of government loans and scholarships, colleges started to charge more (heck, they ain’t stupid).

When the government got involved with health care (Medicare, in the 1960s) costs began to spiral upwards. Both have far exceeded inflation.

I’m for both health care and education, but they offer insight into what may happen if more insurance is forced on the industry.

There is no evidence I’m aware of that added insurance makes us safer. It won’t save lives.

Once the legal community finds out that coverage has doubled, they’ll miraculously discover that the damages are — double. The more blood in the water, the more sharks.

Logically the extra insurance must have increased the danger, rather than limiting it.

Don’t misunderstand. Some mandatory insurance is necessary, but mostly because it can be denied. When a badly behaving bus line can’t get coverage and is forced out of business, that’s a good thing. Insurers are excellent at identifying risk, and they have a real financial interest in safety.

No sensible person thinks a driver’s license denotes competence. It’s something that can be taken away for bad behavior. Extra coverage won’t enhance safety, but withholding insurance entirely might.

Perhaps I’m missing something, but it seems that the only group that benefits from higher mandatory insurance limits is the lawyers (perhaps that’s why they push it).

When a seller knows you must buy their product, there’s minimal incentive to keep the cost down. If they think you are considering extra coverage they will price it differently than if they’re sure you have to buy it. Insurers aren’t evil, but they aren’t dumb either.

It’s now possible for a customer to check a carrier’s coverage online. In a free marketplace, clients who care about things like insurance and safety can look them up.

Bus companies that invest heavily in training and supplemental insurance need to recoup those costs. If price is the major criteria for customers, a free market allows them to go elsewhere.

Like buying a non-refundable airline ticket, they save money in return for accepting added risk. They shouldn’t whine when the risk doesn’t work out.

One guy sought to beat the system by buying $1,000 worth of fire insurance on a cigar. He figured he could torch that baby off, enjoy a smoke and collect $1,000.

Who’d a thunk that was arson? Apparently the insurance company did.

Dave Millhouser is a bus-industry marketing consultant and freelance writer. Contact him by email at Davemillhouser@gmail.com.

Share this post