Thursday, July 06, 2006

Gold-Plated Motorcycles

Here in Connecticut, and in several other states, motorcyclists don't have to wear helmets. It's touted as a personal responsibility issue, with the common argument being this isn't an area that the state need to concern itself with.

I consider myself very free-market oriented, but I think that no helmet rules are incredibly irresponsible, and frankly, I'm not entirely in favor of motorcycles in general.

Imagine that gold-plated cars became all the rage, and that lots of people starting driving gold-plated cars. Every fender-bender that normally costs $5,000 in repairs would now cost $80,000 if you were unfortunate enough to get in a wreck with one of these gold-plated cars. The consequences of this would be that insurance rates would skyrocket, and speed limits would probably be reduced.

Now, how is a motorcycle different from a gold-plated car? If you're in a wreck with a motorcycle, there's likely to be significant medical bills, whereas there'd often be none if the wreck was with another automobile.

Now, I know that many of you are probably saying, don't get in wrecks, watch where you're going, etc. However, no one is perfect. There are potholes, black ice, areas of poor vision around curves or over hills, etc. When you drive now, you have (or at least your insurance company has) a pretty good idea of what a wreck is going to cost. There are accidents that cost a great deal between two vehicles, but they're rare. A car versus helmetless motorcyclist is certainly going to be at the top of the range. A wreck with a regular motorcyclist probably isn't much better.

When a driver gets in his car, he knows the chance of his causing a massive financial liability is quite low if he hits another car. But hit a motorcycle, and there's practically a guarantee of a massive financial liability. When the number of motorcycles, or very expensive cars for that matter, goes up, this will cause insurance rates to rise. There aren't that many expensive cars on the road, mainly because expensive cars require, well, lots of money. But motorcyclists don't need a lot of money, they just need to ride their motorcycles.

Is there really any economic difference between a motorcycle and a gold-plated car? Besides the fact that pretty much any guy with a halfway decent job can afford to ride around on a motorcycle, while only a tiny percentage of the population could even fathom driving a gold-plated car? Don't motorcyclists, and anyone driving an abnormally expensive car, create an externality that the rest of us have to assume? If driving with infants Britney Spears style was legal, don't you think that would make insurance rates quite a bit higher, because if you rear ended someone going 10 mph, you'd cause serious injury as opposed to just a little bit of twisted metal?

Since no one is perfect (after all, you probably have insurance, don't you?), our society has essentially organized itself to have highways with certain speed limits (in some cases set too low for revenue enhancement by local municipalities). These speed limits are usually a reflection of the optimum trade-off between safety and speed. Wrecks are a fact of life, but with the condition of our highways and the speed limits, you know that if you are not driving like a complete maniac, are not drunk or high, that if you cause a wreck with another car, you'll likely not suffer or cause severe injuries, and your insurance company will handle the claim, and you'll go on to drive the next day (probably in a rental car provided by the insurance company), and that your rates will go up, but it's not the end of the world. Hit another motorcycle, however, and your insurance may not cover all the damages based on the maximum payment that the insurance company will make.

Now, you may say, shouldn't the same apply to tractor-trailers. I think not for a few major reasons. First, it's obviously inconceivable that everyone drive a tractor trailer. Second, there's no real substitute for tractor trailers. Our economy would break down if you forced tractor trailer shipments to be done by car. Finally, tractor trailer drivers are the minority in the world of cars, and since they are bigger, there is an extra onus on them to be extra careful. Truck drivers need a special license, can only drive for limited amounts each day, and are prohibited from driving on certain roads.

Finally, I'd like to add that there's no personal motivation on my part. I've never caused an accident (a lady rear ended me once on I-95, but I was stopped in a traffic jam, at least until she hit me and pushed me into the car stopped ahead of me). I don't plan on getting in a wreck in the future, but I can't promise perfection!

1 comment:

TJIC said...

Great post.

I mused about this very topic once, when I read that some local celebrity (forget who) regularly drove his McLaren F-1 (a half million + dollar car) to work. I wondered what would happen if some other driver accidentally hit him. I know that my collision coverage wouldn't cover his entire car. Would I lose my house because he chose to take a half million dollars and put it in play on the highways at 60 mph?

I'm ignorant of what the law actually says, and I'm not quite sure of how this *should* be handled.

Actually, I've thought of this topic quite a few times: two other things that triggered it were getting my motorcycle license, and learning that one DeLorean that rolled off the assembly line was gold-plated, and the owner got an insurance quote for some exhorbitant amount, and decided to just put the car on display instead of driving it.