Download This PaperRaising Compulsory Automobile Insurance Minimum Amounts: A Case Study from the United States
INSURANCE REVIEW 2019 no. 4, 59
14 Pages Posted: 12 Jun 2020 Last revised: 31 Mar 2020
Date Written: April 1, 2019
Abstract
This article discusses a decision both European Union Member States and states in the United States must make: whether to raise their compulsory automobile insurance minimum amounts. The authors review a case study from the United States, the Commonwealth of Pennsylvania, and conclude a proposed increase in the compulsory minimum amounts should pass the legislator. The purpose of compulsory automobile insurance is to compensate victims of automobile accidents. Due to inflation, the minimum amounts in Pennsylvania no longer compensate adequately. Moreover, the data do not support the contention that an increase in the minimum amounts will cause large increases in premiums and uninsured rates. The authors conclude that compulsory minimum amounts should be periodically reviewed, as they are in the European Union, and that arguments about large increases in premiums and uninsured rates should be subjected to a careful review based on data.
Keywords: compulsory automobile insurance, compulsory third-party liability motor insurance, minimum amounts of coverage
JEL Classification: K00, K1, K3, K13
Suggested Citation: Suggested Citation
Dani Wachtel
Widener University - Commonwealth Law School
3800 Vartan Way
Harrisburg, PA 17110-9380
United States