The Effect of Distracted Driving Laws on Automobile Liability Insurance Claims

We examine whether laws designed to reduce distracted driving have consequences for the automobile liability insurance market. Our research is motivated by prior studies that suggest distracted driving laws lead to improvements in traffic safety. Following these studies, we propose that distracted driving laws should also lead to reductions in the frequency and cost of injury liability insurance claims. Consistent with this expectation, we provide evidence that cellphone bans lead to approximately 3,400 fewer injury liability insurance claims, on average, in any given state enacting a ban. Our analysis also suggests that cellphone bans lead to reductions in injury liability loss costs, and we estimate the total statewide savings to the insurance industry, on average, is approximately $32 million per year in any given state enacting a ban. Additional analysis that further considers other types of distracted driving laws confirms that laws designed to limit distracted driving lead to substantial reductions in the frequency and cost of injury liability insurance claims. Finally, we also present analysis that suggests the reduction in claims frequency and injury liability loss costs attributable to distracted driving laws leads to statewide automobile liability insurance premium savings of approximately 4.7%.