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Protecting Consumers From Uninsured Motorists: An Alternative Financing Mechanism
Author(s) -
HOFFER GEORGE E.,
MILLER ELBERT G.
Publication year - 1991
Publication title -
journal of consumer affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.582
H-Index - 62
eISSN - 1745-6606
pISSN - 0022-0078
DOI - 10.1111/j.1745-6606.1991.tb00011.x
Subject(s) - jurisdiction , business , liability , finance , state (computer science) , actuarial science , public economics , economics , law , computer science , political science , algorithm
For over 65 years, state legislators have debated how consumers who have been injured by financially irresponsible motorists will be compensated. While uninsured motorists insurance has become the modal choice among several states, responsible motorists in most states must completely pay for this coverage themselves. Motorists who drive without liability insurance contribute virtually nothing to meeting the costs of accidents they cause. This paper proposes that premiums for basic limits of uninsured motorists coverage be collected by a small universal motor fuel surcharge. These state‐collected premiums then would be distributed to insurers on the basis of the number of vehicles that they insure within the jurisdiction. It is proffered that this mechanism is both more equitable and significantly lower in cost for the average motorist than the various present mechanisms of financing uninsured motorists coverage.