Oh Deer! A Lesson in the Freedom Market

I’m sure you have heard the saying, “there is no such thing as a free lunch.” Whoever came up with that saying had a working understanding of economics. That person understood that somewhere along the line that free lunch was paid for by somebody. Unfortunately many elected officials in Charleston do not understand this most basic of free market economic facts.

Recently State Delegate Ralph Rodighiero (D-Logan) introduced bill H.B. 4498, in an effort to reduce out of pocket insurance expenses of those hitting deer on the states highways. The bill states, “Any person striking a deer on a state highway shall not be liable for repair costs exceeding two hundred dollars regardless of the amount of the deductible required from their motor vehicle insurance policy.” H.B. 4498 is a free lunch bill and somebody is going to have to pay for it.

Those of us that understand economics know exactly who is going to pay for this free lunch. It will be the person purchasing the insurance. The very same person that Delegate Rodighiero’s bill is supposed to reduce cost. Like all businesses, the insurance companies are in business to make a profit. Insurance companies will not simply absorb the cost of fixing the car of every West Virginian that hits a deer without charging the policy holder for the additional coverage that this bill will require.

Currently in West Virginia you are required to have a minimum of liability coverage on your vehicle. H.B. 4498 by default will require all insurance companies in West Virginian’s to sell nothing less than comprehensive (covers deer) with a $200 deductible.

I called my insurance agent to find out what this free lunch would cost. On a 2004 Dodge Pick-Up the difference between carrying liability coverage and a $200 deductible comprehensive is an increase of over $360 a year. Just dropping the deductible on an existing comprehensive policy from $1000 to the proposed requirement of $200 would increase the cost of that same policy over $110 a year. It is easy to see who is going to pay for this free lunch.

The real problem with H.R. 4498 is it that it assumes that West Virginian’s are not able to handle freedom of choice. It assumes that we are not able to make wise financial decisions on our own. The truth is we are able to make those choices and we can do a better job that government can. We understand that if we have a 1989 Cavalier that is only worth $500, it makes no sense to carry a $200 deductible comprehensive insurance policy. We may wish to pick $1000 deductible instead of $200 if we are willing to take that greater financial risk. The economic free market has provided us all with choices in auto insurance. As a result, Delegate Rodighiero is free choosing to purchase $200 deductible insurance on his own, but it will be his choice not the governments.

H.R. 4498 simple takes away our freedom of choice. If passed we will no longer be able pick our insurance based on our need or financial ability. For most West Virginian’s, they will be forced to pick more expensive insurance that they may not be able to afford, want, or need. Government decisions like this one that are not based on sound economic principles or freedom of choice are one of the very reasons West Virginia ranks at bottom of the good economic categories. We must change.