Original scientific paper

https://doi.org/10.3326/pse.42.1.3

On the road again: traffic fatalities and auto insurance minimums

Pavel A. Yakovlev orcid.org/0000-0003-0447-1726 ; Department of Economics and Finance, Duquesne University, Pittsburgh, USA
Christina M. Orr-Magulick ; Gordon Rees Scully Mansukhani, Pittsburgh, USA

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 policy-induced increases in auto insurance minimums are associated with higher traffic fatality rates, ceteris paribus.

Keywords

traffic fatalities; auto insurance; minimums; moral hazard

Hrčak ID:

195244

URI

https://hrcak.srce.hr/195244

Publication date:

8.3.2018.

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