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At the very least here in British Columbia car insurance is very expensive because of substantial payments towards injury and rehabilitation compensation. To me this doesn't make much sense, as in theory car insurance and disability/health insurance should be two completely separate products.

What are the reasons behind such policies? Why not only have the drivers insure their car and then let everyone purchase separate insurance for injuries?

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I think I understand where JonathanReez is coming from owing to the fact that the Canadian province of British Columbia, along with Saskatchewan, Manitoba, and Quebec have nationalized car insurance.

So one can make a comparison to single-payer healthcare. Everybody pays the government for health insurance. If you slip on a rug at home the government pays to fix your broken leg. Everybody has a risk to run over by a car, so shouldn't that risk be paid from compulsory taxes?

The answer is simple. Not everybody causes car accidents. Many people don't drive. They don't put a cost on society like drivers do. Drivers impose a distinct cost on society while performing an activity that largely benefits themselves. Therefore they should shoulder those costs by buying insurance.

For healthcare, everybody is about the same. Everybody has the same body parts, and is subject to largely the same diseases and health risks. This makes compulsory health insurance fair.

There's a separate issue with ICBC, the public auto insurance body, being mismanaged and losing large sums of money, but that's more of a politics question.

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Why not only have the drivers insure their car and then let everyone purchase separate insurance for injuries?

Because people are irresponsible, cheap and bankrupt. And cars are dangerous 1.5 ton weapons.

If you lose control of your car and hit a group of people then you as the driver are liable. You also are totally unable to meet that liability and have not saved up the millions in damages you just caused. Which means that you cause other people non-recoverable loss, financially. Welcome to the real world where bad decisions have really bad outcomes – and in terms of cars that can mean a lot of harmed lives.

So, in most civilized countries the lawmakers have decided you must have a full liability insurance and call it a car insurance. It is not to insure the car; it is to ensure all the damage is covered that you can cause out of extremely comical super errors. And yes, that includes injury and rehabilitation compensation for the group of people that got seriously hurt in the bus that your crappy 20-year-old car was just pushing off the road. Just to give an example where a lot of people may go in for half a year rehab and the cost goes into the millions. And it is the driver's fault.

Also the insurance has to cover damage done by the car. You are totally drunk – insurance covers it. Your driving license is toast, etc., but the damaged party is made whole and that costs.

So, the main reason we do not give you the choice is that, while everyone touts democracy and free will, history shows people do not consider the long tail freak accident. Yes, most car accidents are cheap – but some are extremely expensive and no, you do not have the money to pay for that.

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    What exactly is your knowledge about the USA? All 50 states plus DC have a requirement to either carry a certain amount of liability insurance or otherwise provide surety. – chrylis -on strike- Dec 17 '18 at 9:19
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    "All US states require vehicle owners" - which is probably why many get into court for driving uninsured.It is sos rare, pages like finder.com/is-it-illegal-to-drive-without-car-insurance pop up. And have you checked the legal minimum levels in for example germany? 7.5 million euro PER PERSON INJURED, 1.12 million euro for property damage. Legal minimum. – TomTom Dec 17 '18 at 9:41
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    This answer doesn't really comply with the Be Nice Policy. – Harper Dec 17 '18 at 10:19
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    Really? You mean there are no morons on the street? Note that I do not say the OP is one - there are just enough that the lawmakers found it relevant to make a law.I suggest you "be nice" and head over to youtube watching movies of stupid drvers. And that IS the nice versions. The concept that people like that still are allowed to vote can be seen as why we have stupid policies, btw. – TomTom Dec 17 '18 at 10:31
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    @Fattie I think the point about the 7.5 million euro is that you must have at least that much coverage. Compared to that, some states in the U.S. have ridiculously low minimum coverages... how much wholeness is $30k going to bring someone whose life was ruined by a drunk driver, for instance. (Note in those cases there can still be a suit for a larger amount, but you can't squeeze blood out of a turnip.) – Michael Dec 17 '18 at 16:09
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OP, on closer examination, you seem to be saying:

If you want insurance, buy it out of pocket. Makes sense to me as opposed to only targeting motorists.

You are simply calling for eliminating the idea of liability.

Example, I have a factory, it explodes, and your nearby house is damaged.

The J.R. solution is "why target factory owners for the cost?"

You can list a thousand examples like this, and the end result of the J.R. solution is , simply:

"If party A harms party B, then in fact party B can not seek damages from party A."

Your position is not illogical,

But it is incredibly extreme - it's not even libertarianism.

(In libertarianism, there is indeed no enforced insurance, but everyone sues the hell out of everyone else so aggressively that the only meaningful result is astounding levels of safety and insurance - that's libertarianism.)

Your position (seems to be) basically "If party A harms party B, then in fact party B can not seek damages from party A."

The only real answer to that is

  1. while not illogical, not impossible, not totally untenable

  2. it is a zillion miles away from any system that has ever existed over the last few thousand years - it is a kind of "meta-libertarian" or "do what they will" concept

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    Even the most extreme libertarians must recognize that as a matter of practical reality, situations will arise where it becomes impossible for someone to satisfy all obligations. If a factory blows up and destroys a neighborhood, the victims may be entitled to receive money from the owner, but an owner who has no assets nor means of generating any (since the factory is kaput) the victims aren't going receive the restitution they're owed. Forcing someone to accept a substantial risk that they'll be harmed without being properly compensated is an improper imposition of force, but... – supercat Dec 17 '18 at 18:19
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    ...it can unfortunately be hard to quantify. Things like mandatory-insurance laws serve to reduce such risks, but of course represent an imposition of force on the people required to buy insurance. There's no way to totally avoid the imposition of force somewhere; all one can do is attempt to balance things out so as to minimize it. – supercat Dec 17 '18 at 18:22
  • @supercat Just to add to that good comment, the issue is that everything you do has a risk and a hazard (In safety engineering, the two are distinct. The risk is the chance it goes wrong, and the hazard is what happens when it goes wrong.) The rational choice for imposition of force is that the entity taking the risk is responsible - and when both the risk and hazard are so high that no entity can take personal responsibility, a form of collective responsibility (insurance) is required from the entity. – Graham Dec 18 '18 at 22:42
  • Is it still political ideology if the proposer simply doesn't see the consequences? I'd say an idea is libertarianism (or a more extreme form) only if the proposer has prior knowledge of most of the implications of that idea. If the idea is based on lacking knowledge or understanding I wouldn't conclude anything about that person's political views. – kevin Dec 19 '18 at 13:24
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    @Graham: Insurance is for situations with low probability and high severity. Situations with high probability and severity (to parties other than the one creating the situation) are generally banned. – Ben Voigt Dec 20 '18 at 4:39
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In India, we have the concept of breaking the car insurance into two parts:
(A) liability or only third party coverage (mandatory)
(B) own-damage coverage (optional)

In case you (the first party) cause an accident and somebody else (the third party) is hurt, then you have to pay all expenses because you are responsible; but by taking (A), it is the insurance company (which I presume is the second party) which pays to the third party. This is required by the law and is relatively cheap and the premium costs are almost standard. Driving without this is a crime.

In case your car is damaged in the accident and you want the insurance to pay for repairs, then you should have taken (B) the optional own-damage coverage. Premium amount is more and depends on the value of the car. The maximum amount payable varies between insurance companies and policies. Premium can be increased to get additional optional coverage, such as, for hired driver or passengers or theft. Premium can be reduced by having anti-theft devices (because it prevents thefts) or by making no claims in previous year (because it indicates that the driver is careful) or other ways.

I think, when OP is talking about insuring only the car, he is talking about (B) which is mostly about "car insurance". In India , it is totally optional and has many optional components, but if your car is expensive, then getting it repaired will also be expensive and insurance will be very useful.

Drivers may not be able to pay for damages to others and hence (A) is mandatory.

In general, it is wise to take both (A) and (B) which is known as Comprehensive Car Insurance Policy.

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    Funny enough the OP is asking about A - and why he should be paying his insurance for the damage to other people he may cause. Read it again, it is extremely clear. – TomTom Dec 17 '18 at 11:53
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    @TomTom , I did read the question "Why does car insurance also insure for injuries rather than only insuring the car itself?" , and the body says "Why not only have the drivers insure their car and then let everyone purchase separate insurance for injuries?" ; [[emphasis mine]] ; Also, OP says "in theory car insurance and disability/health insurance should be two completely separate products" ; I say there are indeed two separate components and his meaning of car insurance is (B) which is optional but (A) is mandatory because he is liable to cover the victims. – Prem Dec 17 '18 at 12:18
  • @TomTom , I edited one sentence to make it better .... – Prem Dec 17 '18 at 12:28
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    This is true in the USA as well, actually your part B gets split again, into (1) paying for damage to your car caused by other forces, such as weather, vandalism where the culprit wasn't caught, etc and (2) paying for damage to your car that you cause (negligently, since of course willful damage is always excluded). In our terminology "comprehensive" is only the first, and "collision" coverage also pays when you are at fault . – Ben Voigt Dec 17 '18 at 15:49
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    @Prem: Yes, unless you have a loan, in which case the loan contract (but not the government) will require both B1 and B2. (There are some options for liability coverage which vary from state to state, for example posting a bond in lieu of buying insurance, but you still must show financial responsibility in order to own and operate a vehicle) – Ben Voigt Dec 17 '18 at 18:04
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They are separate products

Auto insurance is internally split into 3 products:

  • Personal liabilty and bodily injury - this insurance covers the fact that operating cars is dangerous. It covers whatever damage you may cause to other stuff you hit
  • Collision - covers damage to your own car caused by driving, i.e. you hitting something. Without it, no one fixes your car.
  • Fire and Theft - This pays to repair or replace your car from losses not caused by driving, trees falling on it, floods, sinkholes, vandalism, etc. depending on your policy. Mechanical problems are not covered.

You are complaining about these 3 policies being mandatory, and think personal liability should no-fault for every driver (your own policy covers yourself), and you should only have to pay collision. That is precisely the complement of how it works.

  • Personal Liability/BI insurance is required by the government when driving on public roads to protect others from you. Consequences for dropping it are criminal side (fines, probation, jail), or if you hit something, on the civil side (lawsuits, asset seizure, garnishment of wages).

  • Collision and Fire/Theft are required by your lender when you have an auto loan, to protect the lender if their collateral is damaged. Consequences are civil, you get your car repo'd. Once paid off, drop it at your peril. It only pays the cost to buy a same-year replacment, so don't carry it on a $2000 car.

Self-coverage doesn't work

Why doesn't every driver just have no-fault personal liability and cover themselves? That wouldn't do anything at all. You'd be simply be putting the entire cohort of people who pay PI insurance onto a boat and saying "instead of all of us paying all of us, instead, all of us shall pay all of us!" You see, it's a wash: you are all in the same big boat, you have simply rearranged deck chairs. On the Titanic.

Because the root problem is the absolutely extreme cost of healthcare these days. That is a separate "problem", and I say that because part of it does not go to graft but actually to astonishing new treatments that save people's lives.

Anyway, your logic has one more flaw, a very classist one, especially in a country with such good public transit. A significant fraction of Canadians do not drive and are not even on the boat of your risk pool. It's easy to dismiss them as the hoi polloi, but in cosmopolitan cities like Toronto or Vancouver, that can be high ranking executives and government officials.

You could say "well, let single-payer take care of all that", but the local chemical plant would also be keen to agree: why bother with safety systems when you can just let the single-payer system absorb all the liability? Parties whose negligence causes costs need to pay back into the system.

It is not workable for you to pay nothing and then $5 million, so you carry insurance that tracks as best it can to your level of reliability as a driver.

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    Going by that logic, wouldn't my proposal make sense in the US, where in some states 99% of the adult population drives all the time? I do see how it doesn't make sense in Canada, Europe or US states with good public transit. – JonathanReez Dec 17 '18 at 19:22
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    @JonathanReez that still doesn't fix the liability-shift problem (highly irresponsible driver/chemical plant having their fair laibility unfairly transferred on innocents). – Harper Dec 17 '18 at 20:16
  • Note: In 2009, 87% (not 99%) percent of the driving-age population (age 16 and over) have a license. In 2018, I think this is closer to 83%. Keep in mind being a "licensed driver" does not necessarily correlate to actually driving, so the number of drivers in the US is not 99%, it is at most 83-87% (assuming you mean driving legally) – GrumpyCrouton Dec 18 '18 at 21:27
  • @GrumpyCrouton It's true. "The bloom is off the rose" of car ownership, and Detroit is brittin' shicks about it. The culture of cars is fading especially among millennials. Folks who have the option just don't see the appeal of paying a fortune for another gray clonebox, ever since fun cars were pulled from the market. In the 12 smog states it is hard to get parts for 1977-1995 cars, and hard to modify post-1996. I have had to live without a car for 3 months, but 15 years ago I chose to live within 2 blocks of a major transit hub. So I get around fine. – Harper Dec 20 '18 at 0:53
  • @Harper I took the statistics to mean that there is simply more adults around, and people are probably a little more likely to carpool or take transit nowadays, especially in bigger cities etc. But you may be right, there may be a correlation between cloneboxes and older vehicles. – GrumpyCrouton Dec 20 '18 at 13:34
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“Car insurance” is really insurance against liability for damages you cause to others and their property by operating your car. The name might have led you astray but this is really a very specific insurance and the only one that's mandatory in many countries, no confusion here. By contrast, insuring your car typically isn't mandatory, it really is a separate product.

Note that liability is a well-established principle with complex legal ramifications. You would be liable for damages caused by reckless driving even without insurance. It's possible to insure yourself against other kind of liabilities, which can also be mandatory in some situations.

5

Answer primarily for Germany, then comparison with what I gather about mandatory car insurance in BC (feel free to correct me).

To me this doesn't make much sense, as in theory car insurance and disability/health insurance should be two completely separate products.

I think what is slightly misleading is that the car insurance is named after what creates the risk (operation of a car), whereas the disability/health insurance is named after what the risk is (disability/injury).
Note that the mandatory car insurance does not cover damage to the car (which one may be led to believe if one took car insurance in analogy to health insurance).

The mandatory car insurance (DE) is actually a pure liability insurance. And your liabilities include health damage you cause to other persons besides material damage (that's the connection to health insurance). Both are exclusively damage you caused others, your own car (DE+BC) and your own health (DE, BC see below) is not covered.

What are the reasons behind such policies?

I think the logical point is the liability: the mandatory (liability) insurances make sure that damage you (your car) cause to others is paid for.

Why not only have the drivers insure their car

For/aginst what exactly? Liability => that's the current status. If you want further coverage of damage happening to your car, you're free to insure that also.

and then let everyone purchase separate insurance for injuries?

Because in general our legal system (both DE + BC/CA) says that if you cause any damage to someone else, you are liable for that. Injuries/disabilities are not excluded, and your car is not treated specially: if you as a pedestrian don't look where you go and walk into someone who falls and breaks their wrist you are liable for that damage, just like you are liable for the damage if you accidentally bump into someone else, and break their glasses. Or if your dog's wagging tail causes your neighbour's 1-year-old to bowl over and fall on their head.

Cars are treated somewhat special as belonging to a class of things that are particularly risky - so that a liability insurance is not only recommended but mandatory. But liability insurance is mandatory for other risky things/activities as well (DE, not sure about BC/CA), e.g. for a hunting license you also need to have a liability insurance covering hunting accidents, and in some Länder a liability insurance for your dog is mandatory, you can follow certain professions only if you have a professional liability insurance, etc.


Several different/separate insurances may be involved with a car accident. Assuming you have an accident and are at fault:

  • Your injury and rehab compensation in Germany is paid by your own health insurance (or your occupational accident insurance if you are driving for work).
    In case you were not just at fault but grossly negligent (say, totally drunk), your health insurance may send you their bill afterwards. Your physiotherapist, however, can be sure they'll get their money for treating you - regardless whether the health insurance's bill will get you into bankruptcy.
    In contrast, in BC, these costs are covered by the mandatory car insurance. So your car insurance may be lower if it didn't have to cover these - however, your health insurance would need to be correspondingly more expensive*.
  • If you (being at fault) cause injury and/or disability to someone else, you are liable. As with car accidents this damage can easily be far more than a single person can be expected to be able to pay, a liability insurance for the car is the mandatory car insurance in Germany**.
    Likewise this is included in the mandatory car insurance in BC.

  • The same differentiating logic is applied to material damage: material damage you cause to others is your liability (and included in the mandatory car liability insurance both in Germany and BC).
    Material damage you cause to your own car is your own. However, if you like you can buy an insurance against that (neither in Germany nor in BC included in the mandatory car insurance).

  • One remaining question is who pays if the liable party is not known (hit-and-run) or was illegally driving a car without insurance (uninsured/underinsured).
    In Germany, all car liability insurance providers together provide a pooled insurance for injuries/disabilities (but mostly not for material damage). In BC, these cases are also covered by the mandatory car insurance.


* If I understand the insurances in BC correctly, there is only one mandatory car insurance provider and one health insurance provider (both provincial). In contrast, in Germany there are many insurance companies who provide the mandatory liability insurance for cars and there are many different health insurance providers.
With only one provider in BC, it may be cheaper overall if the faulty driver's own health and rehab costs are also covered by the car insurance as otherwise assigning the costs correctly to health vs. car insurance may cause further costs that can be saved. Under these circumstances it doesn't matter much whether all those health/injury costs are paid for with your car insurance fee or with your health insurance fee - where you assign it is a mostly political decision.

Philosophically, the decision would depend on the weight you give to various thoughts:

  • that operating a car is inherently dangerous, even with the ideal driver (damage to driver => car insurance)
  • and that better driving usually/often doesn't prevent accidents (damage to driver => car insurance) or
  • that getting yourself into accidents of all sort is rather a general risk in life (damage to driver => driver's health insurance), and
  • that possibly the higher risk of operating a car is already sufficiently punished by your pain, which after all, money doesn't really compensate (damage to driver => driver's health insurance).
  • etc.

**One may reasonably argue that the driver rather than the car should have the insurance - I guess requiring it with the vehicle is a practical decision: drivers may change frequently, but without the mandatory insurance you don't get a license plate (or in some other countries a sticker/sheet that you pin to your windshield) so that missing insurance is easy to spot for police etc. Also liability insurance fees go with annual mileage which is easier to know for a car than a driver.

1

The title of your question seems to show a fundamental misunderstanding of what "car insurance" actually insures. The legally required (in the US, and I think Canada and many other countries) insurance is LIABILITY insurance, for damage you may do to other people or things with your car. It does not insure your car at all. (At least in my state, and I think most places.) Run your car into something solid, say a bridge abutment, at high speed so the car is totally demolished, and your liability insurance won't pay you a cent.

Now you can choose to buy a different sort of insurance called Collision & Comprehensive that does cover damage to your car, but that's a separate matter (even if both policies are issued together by the same company). There's no legal requirement (at least in the places I know about) to have this insurance. It's usually required if you take out a car loan, to cover the lender's risk.

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