Question

Argue (a) the case for compulsory auto liability insurance laws, and (b) the case against these laws. DO the same thing for compulsory PIP coverage assuming no restriction on tort liability.

Answer 1

The main argument which can be given for compulsory auto liability insurance is that it applies a force on those individuals who drive without having any insurance to consider the cost associated with the expected accident which is incurred on other individuals due to their decision of driving without insurance. As there are some costs which are paid by other individuals, thus despite having the expected cost of driving, some individuals make the decision in favor of driving as the cost is more than the benefits related to the driving.

At the same time, the driving record of a person will be the deciding factor in the future premiums to be paid, improved safety can be resulted due to compulsory liability insurance by those who could drive without having the insurance.

The main argument which can be stated against the compulsory auto liability insurance is that it induces the poor individuals who are not in a condition to drive with the insurance to buy the insurance which can advantageous for the other individuals

In case of compulsory PIP coverage, the argument can be given as there is a pressure on the person who will drive their vehicles without insurance to give a thought to the expected medical expenses which could result because of their decision to drive without having the insurance. In the absence of any PIP or medical coverage, medical care will be given to the individual who gets injured in an accident which is sponsored by others