I don’t know why these figures take so long to come out, but numbers for 1995 average automobile insurance premiums have only recently been released. Countrywide, we paid $666 on average, up from $650 the year before.

In California, they paid $831, up from $781.

In Michigan, they paid $645, down from $665.

But it’s not just that Michiganders paid less, or saw a small decrease instead of an increase. It’s what they got for that money. In Michigan, if they were hurt in a car crash, all their medical expenses and rehabilitation would be paid, no matter what. If the bills came to $2 million, they would still be paid. In California, by contrast, auto insurance compensation depended on two things: being able to prove the other guy was at fault and then praying he had enough insurance.

Close to half the accident-causers in California have no insurance or appreciable assets to sue for. Of those who do have insurance, many carry the legal minimum — $15,000. If the bills and future wage loss come to $2 million, tough noogies. You get $15,000 less your lawyer’s fee.

America’s trial lawyers, and Ralph Nader & Co., vigorously urge you to believe Californians are getting the better deal. They say it’s because Californians have the precious right to sue each other over auto accidents. But it’s hard to see why the right to sue — and get little or nothing most of the time — is better than the right to get significantly more without having to sue.

Consumers deserve better.

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A note on the premium comparisons at the top of this comment. They’re for all insurance, including theft and damage to cars. But if you look at just the portion involving personal injury, which is what most of the controversy is about, the difference is at least as stark. Under California’s lawsuit system, that portion averaged $519, up 4.6% from the year before. In Michigan, only $343, down 4.2% from the year before. How can Michigan provide so vastly much more protection for considerably less money? Simple. In California nearly two-thirds of the money goes to lawyers and fraud. In Michigan, it does not.

Tomorrow: What Exactly is Earnings Growth?



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