On the road again: traffic fatalities and auto insurance minimums
DOI
10.3326/PSE.42.1.3
Document Type
Journal Article
Publication Date
1-1-2018
Publication Title
Public Sector Economics
Volume
42
Issue
1
First Page
46
Last Page
65
Keywords
Auto insurance, Minimums, Moral hazard, Traffic fatalities
Abstract
Prior research on policy-induced moral hazard effects in the auto insurance market has focused on the impact of compulsory insurance, no-fault liability, and tort liability laws on traffic fatalities. In contrast, this paper examines the moral hazard effect of a previously overlooked policy variable: minimum auto insurance coverage. We hypothesize that state-mandated auto insurance minimums may “over-insure” some drivers, lowering their incentives to drive carefully. Using a longitudinal panel of American states from 1982 to 2006, we find that policyinducedincreases in auto insurance minimums are associated with higher traffic fatality rates, ceteris paribus.
Open Access
Gold
Repository Citation
Yakovlev, P., & Orr-Magulick, C. (2018). On the road again: traffic fatalities and auto insurance minimums. Public Sector Economics, 42 (1), 46-65. https://doi.org/10.3326/PSE.42.1.3