According to Bob Dylan in 1964, The Times, They Are-a-Changin’. Looking back at the 1960s, it was very innocent, but some important markers were laid down that have slowly build into our modern society. This included the recognition there were times when individual liberty had to be sacrificed for the greater good. A surprising number of people were driving around without any insurance and, when the inevitable accidents occurred, there was no money to pay for the injured to be repaired in hospitals. As more cars were coming on to the roads, all but three states decided to make holding a basic liability policy mandatory. For the record, this is not quite the same as the recent healthcare reforms. In most towns and cities, whether you drive or rely on public transport is a free decision. Deciding to drive is subject to the condition on insurance. Individual liberty is not a freedom to injure someone, and leave him or her without the means of paying for treatment.
Perhaps the libertarians were more reasonable in those days, but there were no protests involving the burning of crosses or the brandishing of guns. These laws were not considered controversial. Unfortunately, once on the books, everyone forgot about them and there were no attempts made to revalue the minimum amounts of coverage required. One dollar in 1960 has the buying power of seven dollars today. That’s the power of inflation for you. So when all the costs of medical treatment and repairing vehicles has been rising faster than inflation, most of the original values are still in place. Except, some states are now biting the bullet and revaluing the amounts.
Take Texas as an example. Until 2007, the minimums stood at 20/40/25. Remember, to catch up, the legislature should have multiplied these amounts by 7. But that was considered a bit too radical. So, to avoid upsetting the electorate, it was decided to raise the minimums by 50% and, to soften the blow, the increase was in two stages. The minimums rose to 25/50/25. In January, 2011, they will reach the heights of 30/60/25. This is rather less than the 140/280/175 needed to catch up with inflation but that would have prompted lynchings. Not surprisingly, premium rates have not risen significantly in Texas.
There has been no outcry over this modest increase. This shows the country should have imposed an annual increase in line with inflation from year 1. That way, insurance coverage would have kept pace with costs and served the purpose of the law. We would have considered this cheap car insurance because premium rises would also have matched inflation. By refusing to revalue the amounts, each new set of lawmakers has effectively defeated the original purpose of the law. This is pandering to the electorate so that every year, car insurance quotes come in at the lowest possible figures. This has left millions of injured people paying for their own medical treatment or, where they do not have the funds, leaving it to the taxpayer to pay their bills.
