Compulsory automobile liability insurance rates in states

Some two years ago when the state of State was faced with the proposition of establishing rates for a newly enacted law which compelled every motorist to carry liability insurance, the Commissioner of Insurance promulgated purely arbitrary rates. In the Boston metropolitan district he took the rates for private passenger cars then in force by the companies and under which they were only about breaking even, and reducing them something like 33 per cent, issued them as the rates to be charged under the new law. Did you know that auto insurance quotes comparison can save you money?

Under the old rates, the companies had been able to select their own business, avoid bad and hazardous risks and pursue a policy of careful, economical underwriting. Under the new law the insurance companies were compelled to accept any and all risks, bad as well as good, and the rates had been arbitrarily reduced one-third. It was inevitable and obvious to the insurance companies that the premium income would be inadequate to pay for all the losses and expenses of doing business in this particular territory.

The expenses, which it was argued would be less because the motorists would be compelled to take out the insurance whether they desired to or not, actually became larger, because of the added confusion and ignorance of the car owners. In fact, if the companies and their representatives had not voluntarily given their services to straighten out the tangle, it is doubtful if the act could have been put into actual force for another year.



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