The Auto Insurance Conundrum

Imagine this for a moment.... someone approaches you and asks if you would like to start a business, they tell you that everyone who owns a car will need it and the marketplace almost guarentees a profit. What's the catch you say? It's the law that people have it!!

That in a nutshell is Liability Auto Insurance coverage in Ontario. First the government of Ontario legislates that you must buy this coverage and then they open it up to the "free" market for pricing and deployment. That has trouble written all over it.

Here is my Reform proposal:

The Province provides the mandatory amount of Liability Insurance for all licensed drivers.

First some facts:

• 15,549,879,000 Litres of Gasoline used in Ontario (2003)
  
  
• 4,943,297,000 Litres of Diesel used in Ontario (2003)
  
  
• Therefore, for every penny of tax levied on the sale of these fuels, $200 million would be generated.
  
  
• Sample : The annual cost to a person consuming an average of 60 litres of fuel per week would amount to $156. (Based on a 5 cent tax.)

The Basic Logistics of the Plan:

• Levy a per litre fuel insurance tax/surcharge on all commercial gas sales.
  
  
• The coverage would be administered and monitored via current valid drivers licenses.
  (A Valid Drivers License = Coverage)

Benefits of the Proposal:

1. Unavoidable:
• You Drive ---> You Buy Gas ---> You Contribute to the Insurance Fund
• If you drive without a Valid Driver's License, you still contribute to the insurance fund even though you are not covered.
  
  
2. Usage Based:
• The more you drive ---> The more gas you use ---> The more you contribute
• You can own a vehicle, and if you choose not to drive it for a week, a month, a year or whatever, you aren't needlessly paying for Liability coverage.
  
  
3. Realistic Driver Evaluation:
• Government already tracks your driving history
• They alone would determine whether you are fit to drive or not (not the Insurance Companies)
• Point system already determines at what infraction level you are no longer fit to drive.
• The system measures the amount you drive and if you are qualified to drive, not things like what kind of car you drive.
  
  
4. Unbiased:
• Does not discriminate against sex
• Does not discriminate against age
• Both of which run rampant in the current system
  
  
5. Misc. Benefits:
• Easier for government to crack down on Insurance fraud (increased penalties etc.)
• More competition among regular Insurance companies for optional coverage. (Since you don't HAVE to have it, you can take your time to shop around or wait for a better price on the extra coverage you are looking for)