The Bizarre Connection Between Legalizing Marijuana and Car Insurance Costs

A study entitled “Medical Cannabis and automobile accidents: Evidence from auto insurance,” originally published in Health Economics, analyzed vehicle insurance data from various ZIP codes in states that legalized medical marijuana between 2014 and 2019. Researchers found that car insurance costs decreased in those states, especially in ZIP codes that either had or were near dispensaries. Contrary to the fear that legalizing marijuana would cause an uptick in accidents, fewer crashes in these states saved Americans about $820 million in health expenditures, and the study’s authors estimate that if marijuana is legalized throughout the entire U.S., it could save another $350 million.

An interesting finding from the study is that car insurance premiums decreased particularly in areas that previously had a lot of drunk-driving DUI arrests before marijuana was legalized in those locations. While there is debate surrounding the safety of driving while high on marijuana, the study’s authors hypothesized that alcohol makes drivers more arrogant and aggressive, while marijuana makes them more aware of their inabilities. This results in slower speeds and fewer risks. Lower risk means fewer claims, which means lower car insurance costs.

Moreover, the study concluded that as medical marijuana is legalized, drunk drivers may turn into high drivers who may be more cautious behind the wheel. Additionally, most people ingest marijuana in the privacy of their own homes, while they’re more likely to consume alcohol in public places like restaurants and bars, leading to drunk driving.¹

So, does marijuana really make you a better driver? The scientific community doesn’t agree on the relationship between driving under the influence of marijuana and safety. The Centers for Disease Control and Prevention, for example, states that marijuana leads to more accidents as the drug impairs coordination, distorts perception, slows reaction times, and makes it hard to make decisions.² More accidents mean more insurance claims.

However, a study from the Canadian Institute of Actuaries found just the opposite: Marijuana decriminalization doesn’t result in any statistically significant changes in insurance claims frequency or the size of claims, both in the U.S. and Canada. In fact, while the study’s authors admitted that marijuana affects driving behavior, they believe this doesn’t necessarily indicate more risk and could actually cause safer driving behaviors like slower speeds and longer following distances.

Regardless of its physical and mental effects, driving with any amount of tetrahydrocannabinol (THC), the psychoactive ingredient in marijuana, or its metabolites, in the body is illegal in 10 states. The states with a zero-tolerance policy are:

• Arizona
• Georgia
• Indiana
• Iowa
• Michigan
• Oklahoma
• Pennsylvania
• South Dakota
• Utah
• Wisconsin

Every other state has legal limits for the amounts of THC you can have in your blood while driving.³ And you just may save on your insurance to boot.