In 47 states, drivers are required, at minimum, to carry a compulsory auto liability policy. The rules and potential penalties vary by state. Homeowners insurance is not required by law. However, if you finance your home through a mortgage lender, the lender usually requires homeowners insurance. Five states require employees in the private sector to purchase short term disability insurance. Should this requirement be expanded?
The purpose of compulsory auto insurance policies is to protect the public from the high costs of injuries and property damage resulting from vehicular accidents. Most states establish a minimally acceptable level of coverage to guarantee medical and property costs will be met. The states put these requirements in place because it realizes many consumers will choose to roll the dice. They will opt out of coverage to save money, only to leave them exposed in the event of an accident.
State Insurance Mandates
Should more states require workers to purchase short term disability insurance as they require auto insurance, or as lenders require home owners insurance? Break down the reasons behind these rules to reveal arguments for and against.
With auto insurance there are often multi-car accidents. Often the accident results from an error on the part of one driver: speeding, running lights, driving while impaired. A requirement for all drivers to have coverage protects the innocent parties in accidents: passengers, and drivers operating safely.
In the home owners insurance market the lender requires coverage in order to protect their interests. If a homeowner puts makes a 20% down payment, the lender has a much greater exposure to loss than the homeowner in the event of a catastrophic loss; hence the requirement for coverage.
Paid Maternity Leave
Paid maternity leave gets plenty of negative attention in the U.S. Many European countries have laws mandating maternity leave pay and job protection benefits. Meanwhile the U.S. has no federal maternity pay law, but does provide unpaid job protected leave via the Family Medical Leave Act. Five states have mandated short term disability coverage, which creates six to eight weeks of partial income replacement for maternity leave.
Mandated short term disability insurance protects workers who miss work due to accident or illness. Pregnancy is the leading cause of short term disabilities - despite the fact that only half the population is biologically capable of delivering a baby. Working women of child bearing age clearly benefit from these mandates the most; they gain maternity pay and income security in case of complications.
Should more states join the fray and require workers to buy coverage so that more women can have maternity pay? Unlike the Auto Insurance example, an uninsured mother does not harm any innocent parties. And unlike the Homeowners Insurance example, she does not jeopardize a lender's interests.
Give Working Women the Choice
But her ability to cover expenses during her maternity leave may be greatly impaired if combined with an extended leave before and/or after delivery because of complications. A mandate in all fifty states would help avoid these difficult circumstances.
Or we could do a better job of letting employers know how voluntary short term disability can be offered at work, and purchased by employees to cover illnesses, accidents, and pregnancies as well. The option exists today. Women should know about the value, and ask their employer to provide them the option to pay for coverage themselves, and enroll before getting pregnant.