Study Finds Car Insurance Premiums Dropped In Legal Medical Cannabis States By At Least $22 Per Driver
According to a University of Iowa study, states that legalized medicinal marijuana saw a reduction in the cost of automobile insurance, which suggests that driving under the influence of cannabis may not be as risky as driving under the influence of alcohol.
According to Cameron Ellis, professor of finance at the University of Iowa (U of I), states that legalized medicinal marijuana between 2014 and 2019 saw rates decline by an average of $22 per driver in the first year after doing a ZIP code-level analysis of insurance data.
"As bad as marijuana is for driving, alcohol is much worse," Ellis said. "So it's sort of this reduction in DUIs leading to the decline," he said. "In areas that had high levels of DUIs before medical cannabis legalization, rates fell at a much higher rate."
According to Ellis, there are likely two explanations for this. First, some people stopped driving under the influence and simply switched to marijuana for recreational purposes because marijuana and alcohol affect driving differently.
But another possible one is that you frequently use marijuana and alcohol together at home, Ellis told the local media. You smoke at home instead of going to a bar, so even if you aren't drinking less, you drive less while intoxicated.
Legalisation Opponents Say All Impairment is Dangerous
The harm currently inflicted by drunk drivers is cited by opponents of legalizing marijuana as evidence that doing so will only increase the number of collisions, injuries, and fatalities.
According to Ellis, the U-I study effectively refutes that claim because alcohol and marijuana affect drivers differently.
"There's this trope where people say things like, 'Oh, I'm a better driver while I'm drunk,' but in reality, you're not, but you're really, really confident, and that causes a lot of problems," he said. "However, with marijuana, you're famously paranoid that there are cops everywhere, so I'm going to go exactly the speed limit.
Contrarily, Ellis claims that whereas alcohol tends to make drivers more aggressive, marijuana has a mellowing impact and increases awareness of one's limitations, causing one to drive more slowly and with less risk.
According to the study, the legalisation of marijuana has already prevented health costs associated with crashes totalling roughly $820 million. According to Ellis, an additional $320 million might be saved if medical marijuana was allowed nationally.
The Impact of Medical Cannabis Legalization on Insurance Rates
The legalization of medical marijuana has sparked curiosity about how it might affect various industries, including the cost of auto insurance. This section investigates how legalising medical marijuana affects insurance rates and the states where it is available legally.
Researchers evaluated data from several states that had legalized medicinal cannabis in order to determine the association between the legalisation of medical cannabis and vehicle insurance costs. Comparing insurance prices before and after legalisation to spot any notable variations was the goal.
Understanding the possible effects of medical marijuana legalisation on numerous industries, including auto insurance prices, has sparked an interest. This section examines how insurance rates are impacted by the legalisation of medical marijuana as well as how it affects the states where it is available lawfully.
Academics examined data from a number of states that have legalized medicinal cannabis to determine the association between medical cannabis legalisation and vehicle insurance costs. In order to spot any substantial changes, the comparison of insurance prices before and after legalization was the goal.
In states where medical cannabis is permitted, car insurance rates noticeably drop, according to a key conclusion of the study. The average rate dropped by at least $22 per driver, demonstrating a significant fall in policyholders' insurance expenses. This observation prompts fascinating inquiries into the underlying causes of this drop.
Several possible explanations can be proposed, even though the study does not offer a conclusive justification for the premium drop. First off, the availability of medical marijuana might have reduced accidents and the ensuing insurance claims. Cannabis is frequently used as a painkiller in place of prescription opioids, and studies suggest that this has reduced the number of accidents and injuries linked to opioid use. Additionally, some research has indicated that cannabis users are more circumspect and self-aware of their impairment, which results in safer driving practices.
Implications for Insurance Companies and Policyholders
The study's conclusions about the decline in auto insurance rates in places where medical marijuana is permitted have important ramifications for insurance providers and policyholders. The practical applications and issues raised by these discoveries are examined in this subheading.
The study advises insurance companies to review their underwriting guidelines and premium estimation methods in states where medical cannabis is permitted. The observed fall in premiums points to a decline in policyholders' overall risk profile, which could prompt changes to pricing methods. When calculating premium rates for policyholders in these states, insurers may need to take into account the potential advantages connected with medical cannabis usage, such as the reportedly decreased number of accidents and claims. For people who use medicinal cannabis as part of their pain management or treatment plan, this could lead to more favourable rates.
Additionally, insurance providers could gain from tracking and examining the claims trends and driving habits of policyholders who use medical marijuana. This information can provide light on the long-term effects of legalising medical marijuana on accident rates and insurance claims. By utilising this data, insurers can improve their risk assessments and pricing plans, ensuring that premiums appropriately reflect the changing environment brought about by the legalisation of medical marijuana.
The results could result in customers paying less for their auto insurance. People who live in states where medicinal marijuana is permitted may pay cheaper premiums, giving them a financial edge and lessening the cost of insurance. This decrease in premiums may provide policyholders more money to spend on other crucial aspects of their lives, including healthcare, education, or savings.
Policyholders should be aware, though, that the effect of medical marijuana on insurance premiums may differ based on personal circumstances and particular insurance policies. Along with the impact of medical cannabis legalisation, factors including driving history, age, geography, and vehicle type will still have an impact on premium rates.
Policyholders should communicate openly and honestly with their insurance companies about their usage of medical marijuana. Insurance companies may accurately estimate risk and possibly provide more suitable premium rates if relevant information is disclosed.
Bottom Line
The study shows that driving when intoxicated with alcohol carries much larger dangers than driving while intoxicated with marijuana. As a result, car owners who use cannabis properly see a significant drop in insurance costs. In addition to being advantageous financially, this fall in premiums also suggests the possibility of fewer DUI incidences and the encouragement of safer driving practices. By accepting cannabis as a substitute, people may help to create a more secure driving environment, highlighting the significance of comprehending the various effects of drugs on driving behaviour and taking the necessary precautions to ensure road safety.
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