Impact of Automobile Seat-Belt Law on Insurance Cost*

The efficacy of vehicle safety regulation has been questioned by researchers, while its measurement depends mostly on fatality rates. This paper investigates the impact of U.S. seat-belt regulation on the cost of automobile insurance. Statewide automobile loss ratios are used as a measure of insurance cost to test for enactment effects and law enforcement effects across fifty jurisdictions. ANOVA results indicate that automobile insurance cost declined following enactment of seat-belt law. The decline is not distinguishable between states with primary and secondary enforcement laws, while states imposing heavy penalty show larger decline than those imposing light penalty. The results suggest that monetary penalty is an effective measure to enforce the seat-belt regulation.