If we ignore the application of the steam engine as a means of transport, the invention and development of the automobile in the last decade of the nineteenth century has proved to be revolutionary. Over just a few short years, society went from being dependent on the iron horse and real horses, to the horsepower generated by a gas-powered engine. In historical terms, it freed people from the tyranny of mass transport and gave people the freedom to travel whenever they wanted and as far as they could given the evolving state of the road system. The implications were both cultural and economic. Because people were no longer tied to local shops, competition became more effective to protect consumers. The design of cities also had to change to enable roads to admit trucks and cars. Urban sprawl was invented to allow people to live in rural surroundings and commute into work. Unfortunately, not all was without problems.
The car is a dangerous weapon
For centuries, the law of tort has made people liable to pay compensation if they injure others. The moment anyone buys a vehicle, this is like buying them a gun. Cars can inflict serious injury or death. It can also cause an immense amount of damage to property. If the owner (or driver) of the car is at fault, the financial consequences can be devastating. So what were law-makers to do?
They assumed driving was a privilege and not a right. It was therefore proper to require everyone who chose to buy a car to insure and so protect third parties who might be injured. The result was the financial responsibility laws passed by every state in the union. Every driver must have access to funds sufficient to pay a guaranteed minimum to people injured. Most meet this obligation by buying car insurance.
Where did car insurance come from?
In 3,000 BC Chinese merchants were spreading the cost of loss among themselves for the transport of goods by river or sea. This idea spread to Europe and then to America. Now drivers share the cost of losses caused by medical expenses, and vehicle repair and replacement. It’s perhaps ironic the modern practices should be rooted in the earliest form of marine transport, moving from exclusive systems to protect rich merchants to a system that supports a society now dependent on the car. Worse, since an average of 20% of drivers neglects to insure themselves, the majority of law-abiding drivers are penalized and have to pay more than they should. America has become a society that protects the 20% of drivers who refuse to comply with the mandate.
What does the future hold?
Mass-produced cars have become the standard form of transport, bringing with them the greatest potential for death and injuries society has ever seen other than in epidemics. Unless states begin to actively police uninsurance, the whole system could break down. Politics and the law need rethinking to produce a more equitable way of paying for people to receive the medical treatment they need, or to repair the property they have lost.