Wednesday, 21 October 2015

Motorcycle accident costs

I like the basic design of New Zealand's accident insurance system which is administered by the ACC. Insurance monopolies have some clear economic advantages and the "no fault" concept avoids a lot of unproductive rent-seeking by lawyers.

That said, ACC does seem to have a blind spot when it comes to motorcycling, an activity that we all know is somewhat dangerous. Personal injury is more likely if you are riding a motorcycle than if you are driving a hummer, or indeed any vehicle with 4+ wheels and a steel cage.

I have no problem with the way ACC treats bike-only accidents. Bikers should pay levies that cover the full cost of those accidents.

Most of the accidents involving motorcycles (about 2/3 of them) are crashes with other vehicles though. So imagine/remember a motorcycle being cleaned out by a much stronger vehicle. Most of the resulting injury costs will be to fix up the biker and in the ACC's view bikers should pay for all of these costs.

Some obvious questions arise. What happened to the "no fault" concept? Is it my "fault" that I ride a motorcycle and am therefore vulnerable to the behaviour of idiots in cars? Why don't drivers of cars, trucks & buses have to share the cost of the damage they cause to motorcyclists?

And if you think bikers should be treated this way, imagine if the same idea was applied to other categories of vehicles. ACC levies would be lower, the larger the vehicle. You're more exposed in a Daihatsu Charade than a Ponsonby tractor, so you should either pay more in ACC levies or join the arms race.

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