If insurance is legally mandatory, then it should be covered by taxes.

1)You are assuming that every driver is paying taxes. Rental car Companies offer insurance to foreigner so that they can get around the industrialized countries that they are visiting. The Rental Car Companies have to pay for insurance premiums on the car plus what the foreigner is paying in premiums usually much higher than the Rental Car Companies to be legal in that country. Plus, these foreigners are not paying into the system so therefore the taxes will not cover them. Also, are you going to pay the Insurance premiums twice (Rental Car Companies and the Foreigner) since taxes will now cover all insurance payment? The Insurance companies will just love that making huge profits off Double Dipping. ================== when we rented a car, we didn't have to take the insurance bec he already had his own insurance. that meant in the event of an accident, the rental company's policy didn't come into play. as far as i know, it is illegal to double-dip insurance policies so if the vehicle is already covered, it's covered. it's not the driver that is insured, it's the vehicle. if the rental company has done their due diligence, then insurance would cover everyone renting their vehicles. if they rent to someone who is actually not a qualified driver, then that's out of their own pocket. they would, of course, have the option to refuse to rent to someone who does not hold a driver's license valid in their state/province/whatever. the govt could have "visitor" insurance packages on offer should they be required (some foreigners find it cheaper to buy a car for the duration of their stay), similar to the health insurance offered by travel companies in case one finds oneself needing medical attention while on vacation. ================== 2)You are forgetting about substitute goods in economy such as Trains, Taxi-cabs, Buses, Bikes, and Walking. Are you going to cover insurance premiums for walking? ================== ppl who are walking or bicycling are unlikely to cause damages in a collision with a vehicle. they are, however, very likely to suffer damages. right now, if they are taken out by an uninsured driver, they're screwed unless the driver is rich enough to cover the cost of their treatment, therapy, and compensation. having insurance automatically guaranteed by the govt ensures they won't be robbed. if they were paying in through taxes, they would be contributing to insurance which they are not doing now. as i said, if insurance is intended to protect "everybody on the road" from driver or mechanical error, it's only fair that "everybody on the road" chips in. right now, if a pedestrian walks out from between two parked cars and gets taken out by an insured driver, the insurance company is likely to not only reject the claim bec it was technically the pedestrian's fault, but they would also jack up the driver's premium even though they haven't actually had to pay anything out. trains, cabs, bus, and similar public transit systems are already required to have insurance - since they are a transit business, i'm sure there would be an additional business premium. it's not like "Metro Transit" with 1500 artic busses would pay the same insurance premium as Joe Blo and his Honda Civic. ================== 3)If we used a fixed amount, are you going to adjust the fixed amount for inflation or deflation? ================== that would naturally follow. furthermore, it should be done in classes: residential (non-commercial) drivers of economy cars pay 'x'; non-commercial drivers of luxury or high-powered cars pay 'x plus a bit'; commercial non-transit drivers, where the driving is integral to but not central to the work performed (ie, travelling salesmen, building contractors, etc) pay 'y'; commercial transit, where the driving is central to the work performed (public transit or delivery, f.ex) pay 'y plus whatever'. furthermore, if it turns out there have been more claims than would have reasonably been expected in a particular sector, premiums go up; if there have not been as many claims as was reasonably expected, premiums go down. if there have been a massive number of claims in the commercial transit sector but the residential economy car sector had a very clean year, Metro Transit's premiums would go up while Joe Blo in his Civic would enjoy a reduced premium. right now, the only way premiums go is up - insurance companies *claim* to lower your premiums over time and they give you a reduction at certain intervals but only to a point. then they start clawing back: ex-boyfriend of mine with over 25 years' clean driving saw his insurance premium (with the same company) more than double in that time while they cut back coverage and increased his deductible. excuses he was given included "the economy", "an increase in the number of traffic accidents in his area" (remote northern ontario!), and "9/11". the system as it stands very quickly and very heavily penalizes drivers. it doesn't take much to drive the cost of insurance beyond what a low-income earner who relies on his car to get to and from work can afford - this increases the risk of him taking the chance of driving without insurance, especially in rural and remote areas where there is unlikely to be any public transit system and amenities are few and far between. by paying it through taxes, he is guaranteed coverage in the event of an accident and the public is spared cases such as these with the attendant time wasted dragging it through court and the appeals process: http://insurancenewsnet.com... (chiropractic treatment plus headache - no surgery, no fractures, no broken bones, but he gets $160,000) and http://www.bizjournals.com... (where the woman caused the accident, yet was awarded $14.6 million dollars in damages) head injury with no broken bones, 100% chance of full recovery expected once the headaches clear in a week or so (what we in the "mom" business like to call "a widdle booboo")? you get 'this' much. head injury with whiplash expected to leave permanent results? you get 'that' much. injury with permanent loss of income? you get an amount factored by the injury plus the reasonable amount of income you would've earned over your working life - no millions of dollars "just because".