Reader Question: Ex Post Facto Mafia Mordita?

Heres’ the latest reader question, along with my reply!

Mark asks: I just learned from my father in law who is in banking that some insurance companies are implementing a new policy that charges an increased premium if your car (not necessarily you) has had an accident before. Apparently, this applies even if the accident was ten years and three owners ago. Unfortunately, he couldn’t tell me which companies specifically, but that once some of the big ones started this practice, that they all would be implementing this policy likely in about five years’ time. Just wanted to give you the heads up in case you didn’t already know about this.

My reply: I hadn’t heard about this; thanks for the warning! Of course,

I’m not surprised, either. The mafia’s argument, no doubt, will be that certain cars are more accident prone (for a variety of reasons) and that a prior wreck is prima facie evidence of this.

It’s not an illegitimate argument, as such.

It is essentially the same argument – as such – that a driver who has been the cause of accidents in the past presents a greater risk of having an accident in the future.

Of course, it may not have been the car’s fault – and to penalize its current owner is certainly unjust.

But the underlying injustice – as I see it – is not being able to tell the mafia to bugger off. To be able (legally) to say no. I have written and ranted about this at length in many previous columns, but the gist is that when you can’t say no to anything, you’re gonna get what you don’t want.

And when someone can force you to buy something, they can force you to pay more for it.

This is as true for insurance as it is for hamburgers. Imagine if the law required us to buy at least one burger a week. What do you suppose the price of a Big Mac would be? And also a Whopper? Yes, you could choose one – or the other – but McDonald’s and BK would know you had to buy from one or the other – and thus, the price of both would likely be twice what it costs now – because we are free to say no to both.

If insurance were subject to the same market pressure that hamburgers are subject to, insurance would be reasonable (and reasonably priced) for drivers who haven’t given any reasonable reason to jack up their rates.

Because they could just say no to unreasonable rates.

. . .

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