By Guy Page
Car insurance rates are likely to increase 4-6 percent in states with legal marijuana, a leading insurance industry actuary says.
“You’re looking at an increase of around 4 to 6 percent in overall coverage,” James Lynch, chief actuary of the Insurance Information Institute told the Boston Herald. Even if drivers don’t smoke pot themselves, their insurance rates will increase regardless, Lynch said.
A 6 percent increase in insurance premiums on all 615,950 registered vehicles in Vermont would cost about $28.3 million. The average Vermont car insurance premium is $764, according to Reviews.com. A 6 percent increase would add $46 in annual premiums, for a total of $810.
The rate hike would result from the increase in car crashes in pot-legal states, Lynch said. In Colorado, Nevada, Oregon and Washington crashes are up about 6 percent compared to neighboring states.
“We want to make people aware that there is a social cost involved,” Lynch told the Herald. In Vermont, Democrat legislators and an increasing number of Republicans favor a “tax and regulate” form of commercial, legalized sale of marijuana. Gov. Phil Scott says he still opposes further legalization of marijuana and is waiting for the Vermont Marijuana Commis
sion to issue its final report, which is due in December. A preliminary draft is scheduled to be ready in November.
But couldn’t the Vermont Legislature just raise marijuana taxes and send out a rebate check for $46 per vehicle owner? It’s possible but highly unlikely because state officials rightly fear that every tax hike will perpetuate the established black market. Drug dealers don’t pay taxes or fees. They already enjoy a significant competitive advantage over “taxed and regulated” marijuana sales. A “car insurance rebate tax” would just reduce legal sales revenue while rewarding the black market.
Contrary to the hopes and expectations of some “tax and regulate” supporters running for elective office, the Legislature should not expect any “leftover” cash for existing, cash-strapped programs. The expected T&R fees and taxes will only cover the cost of industry regulation, drug prevention, and public safety, Tax Commissioner Kaj Samson told the Vermont Marijuana Commission on Sept. 10.
Give $28.3 million of state revenue back to car owners? Dream on. A vote for legal pot is a vote for increasing the automobile insurance of every Vermont driver.
Statehouse Headliners is intended primarily to educate, not advocate. It is e-mailed to an ever-growing list of interested Vermonters, public officials and media. Guy Page is affiliated with the Vermont Energy Partnership; the Vermont Alliance for Ethical Healthcare; and Physicians, Families and Friends for a Better Vermont.