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Comment by seanmcdirmid | Hacker News Reader

Liability insurance is based on other people’s cars. Comprehensive and collision is based on your own car.

It's based on a whole lot of things. Drivers of Ford Mustangs may be involved in more accidents than drivers of Toyota Corollas. The number of miles you drive, and for what purpose, and your personal accident history, and your age and sex and marital status and whether you live in an area with snow and ice in the wintertime or not, all factor in to the rate you are charged.

Liability is more about medical costs, no? If it were bounded to vehicle cost, I'd self-insure.

I’m sure car insurers pay out significantly more for vehicle damage than person damage. Most accidents don’t involve harm, but body shops are getting expensive. For WA:

> In 2019, there were 45,524 reported car accidents in Washington State. Although 32,106 resulted in no injuries, 325 were fatal and 973 resulted in serious injuries.

https://www.weierlaw.com/dealing-with-an-auto-accident-in-wa....

The first dollar of insurance coverage is the most expensive, because any claim hits it.

Going from $100k to $2m is often quite cheap, comparatively.

The number of claims over $100k are much less frequent, which is why it is cheaper to raise your cap.

It seems like the ideal plan is a high-deductible with no maximum, like catastrophic medical coverage.

I'd bet that the median claim is quite different than the mean claim, because the outliers are so large. Much like the "shocking" statements you hear about wealth distribution -- the largest 10 are bigger than the bottom 50% or similar. That's how log-normal distributions work. Though of course the Gini coefficient can vary.

I've wondered what happens if I have an at-fault collision where I total a hypercar whose value exceeds my maxed-out $2 million liability coverage. Can the car owner come after me for the difference?

Yes, you're ultimately liable for damages you cause.

I would expect your insurance to ask the damaged party to release you from further liability as a condition of accepting settlement at the coverage limits, but if the damages are significantly over the coverage limits and it seems likely that they could significantly collect on a judgement beyond your coverage, it's a possibility.

Umbrella insurance can go up to much higher limits ($2M is maybe already be an umbrella policy), sometimes up to $10M is easy to get, and depending on your insurer, often the upper millions are much less expensive. The tail risk is pretty small. If you're worried about it, may as well ask for quotes at $5M and $10M.

> Liability insurance is based on other people’s cars.

This is what I dislike about insurance. If someone hits my (hypothetical) $100k car and ruins it, I win $100k, but if someone hits my $1k car, I only win $1k.

Yet the person that hit me did precisely the same action/error.

Insurance is not a punitive fine or lottery. If someone drives into your house and causes $100k in damage, you would also get $100k (assuming the minimum legal coverage is that high, which it might very well not be in many or even all states).

I specifically recall New Jersey letting poorer people drive “insured” by letting them purchase insurance for effectively fender benders, and if they caused more damage, good luck pursuing them.

> Insurance is not a punitive fine or lottery

It functions as one, regardless of intentions.

You could also look at this the other way: the person driving the rust-bucket with 0 functioning airbags might win more injury compensation than the individual driving something solid with 9 airbags and walks away.

That’s called moral hazard.

The point of insurance is to make you whole, not to make you better off.

If it did, you'd have more incentives for insurance fraud.

(Also it's the other guy's insurance that pays for it, and if the insurance industry disappeared overnight, and you had to sue for damages directly, no judge would award you more than the damages you sustained. (For an honest accident.))

A big problem at the lower end is that insurance companies don't value cars based on their utility. I have a well maintained older car that is reliable and I trust the work that has been done, but it would be valued at around $2k by insurance. In order to buy a car with similar reliability would be closer to $5k. If someone else hits my car, it will be probably totaled at current repair prices and so I will have lost ~$3k.

Indeed, it doesn't take much damage for the insurance company to declare a low-end vehicle a total loss and salvage it instead of repairing. Could be just cosmetic damage and you find yourself in that problem.

As a result, I don't pay for coverage for my own vehicle in case I'm at fault. My jurisdiction now lets me opt-out of repair coverage others are at fault, but I couldn't stomach that. I think it's just for rental car cos that have their own repair facilities and to avoid ever getting a salvage title.

Why do you dislike that? The purpose of insurance is to help protect against losses. If you don't have a $100k car, you can't lose it.

And this is reflected in your insurance premium. The cost to insure your own car is lower if you have a less expensive car.

I do, however, think it's a bit unfair if you have to pay more for liability insurance because other people have chosen to buy more expensive cars.

> think it's a bit unfair if you have to pay more for liability insurance because other people have chosen to buy more expensive cars

Yes, this. You can opt-out of insurance for your own vehicle if you want, but generally required to buy some minimum for everyone else's property that might be involved.

This doesn't bother me. It's about making you whole after random events. It's better to imagine a meteor hitting your car. If it turns your $100k car into a crater, you have a $100k car afterwards. If it turns your $10k car into a crater, you have a $10k car afterwards. If the meteor hits a big open field, you still have your car. It's like meteors no longer exist, so you no longer need to worry about them. That's all insurance is.

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