Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Wednesday, August 24, 2011

How car insurance underprices the risk to pedestrians and cyclists

Washcycle mentions an insurance case in Alaska, involving an accident between a pickup truck and a cyclist, where it was stipulated that the truck driver was at fault. The insurance policy limited liability to other parties to $100,000, even if the actual damages were much higher.

As commenter JeffB states

Every state's minimum insurance requirements are dreadfully too low. In this case the motorist had $100,000 liability (not insignificant) but his own insurance company valued the damages to the cyclist to be $375,000 - $475,000.

And this from simply pulling in front of a cyclist.

What I get from this is:
1) Minimum liability insurance needs to be raised several orders of magnitude.

2) Perhaps we should have a new liability insurance component that specifically covers damages to person(s) who are NOT motorists (and by virtue of not having several tons of steel protection suffer greater injury).

I would set a liability requirement for damages to non-motorists to be several multiples of the existing liability minimum limit.

Keeping in mind that a car - car collision at 25 MPH likely will not injure any of the occupants while a car - pedestrian collision certainly will). Actuaries could work out the correct multiple.

Crickey7 makes the key point:

... It's truly risk-shifting to the victims and an example of moral hazard in that the irresponsible pay less in insurance premiums and get away with it.

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At 5:13 AM, Blogger Dwayne Charles said...

This comment has been removed by the author.

At 5:43 AM, Blogger Dwayne Charles said...

I also think that the car insurance can surely reduce the risk to the people who are not driving any auto mobiles. Such people include the road side cyclists, pedestrians etc.
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