Car insurance rates to increase in states with legal marijuana


Vermont Voters Warned A Vote for Legal Pot is a Vote for Higher Insurance Rates

Reprinted with permission from Statehouse Headliners

By Guy Page
October 25, 2018 – Car insurance rates are likely to increase 4-6% 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 October 24, 2018. 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 A 6% 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 in pot-legal states 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, 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 Commission to issue its final report, which is due in December. A preliminary draft is scheduled to be ready in November.

But wait – 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 September 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.

State House Headliners is intended primarily to educate, not advocate. It is e-mailed to an ever-growing list of interested Vermonters, public officials, and media. To receive Statehouse Headliners or to stop receiving it, email Readers are encouraged to interact with legislators from their House and Senate districts.

Guy Page and/or Page Communications is affiliated with the Vermont Energy Partnership, the Vermont Alliance for Ethical Healthcare, and Physicians, Families & Friends for a Better Vermont. Guy Page is a member of the coordinating committee for the Consumer Liaison Group of ISO-New England, the operators of the regional transmission grid. He is an occasional host on Common Sense Radio on WDEV, and publisher of the Vermont Daily Chronicle. A Burlington native raised in Colchester and a 1979 University of Vermont graduate with a career of Vermont journalism and government relations, he and his wife Colette live in Berlin, a 5K run/walk from State & Main in Montpelier.

See also Vermont Physicians Group Comes Out Against Legal Marijuana Market

From Vermont Digger

The society, which represents about 2,000 of the state’s physicians and physician assistants, said in a resolution Oct. 27 that it would oppose the creation of a system for commercial marijuana sales in meetings with lawmakers and the governor in the coming months.

“Other states are seeing many different ramifications from a commercial system,” said Stephanie Winters, deputy director at Vermont Medical Society. “We need to be very aware of those things and be wary of how that will affect our state and our youth especially.”

Recreational marijuana use became legal in Vermont on July 1, but non-medical sale remains illegal. Gov. Phil Scott has appointed a panel to look into a system to tax and regulate cannabis and to report back in December. A proposal is expected to come before lawmakers next year.

Read more Vermont Physicians Group Comes Out Against Legal Marijuana.