fire+flames+xgold

Currently, fire departments are funded by property taxes, sales taxes, levies, and the like. Fire fighters are employed by local municipalities and are considered to be public servants. I think it’s quite clear that fire protection could very easily be provided by the market without the use of violence or threats of violence inherent in collecting taxes. Let me show you how.

When buying real estate, the lien holder requires the property owner to purchase insurance against damage to the property. The exact requirements vary but this typically includes protection against damage done by natural disasters or crime. Lien holders want to make sure that if something happens to the property, they will be able to recover their investment. If a home has a $100,000 policy and a tornado razes the home, the homeowner, using the insurance money, will be able to pay a construction company to rebuild which protects the lien holder from losing their investment.

Health insurance works similarly. The policy holder pays the insurance company to protect themselves against disease. If they happen to need some expensive medical treatment, they call on the insurance company to pay the claim in order to prevent the death or continued disease of the policy holder.

I think we understand pretty clearly how insurance works. It’s obvious to me that fire protection could easily be accomplished using the same methods.

A property owner would be required to purchase “fire insurance” by the lien holder as a condition for receiving the loan. As long as the property owner had a mortgage, the lien holder would require him to hold fire insurance. This system already exists for property damage. It’s called homeowner’s insurance. A fire insurance clause would raise the cost of homeowner’s insurance by just a few percent probably.

When the property owner paid off the mortgage, the decision would be his whether or not to continue paying fire insurance. I think most people would keep paying, but it matters not. Hardly anybody owns their property outright anyway.

In the event of a fire, a property owner could call their local fire protection company who would rush to the scene of the fire. It’s likely that they would already have the property owner’s insurance information on file, because this would be required by the insurer. In the extremely rare event that a property owner did not have insurance, the neighbors would call their local fire protection company who would rush to the scene of the fire to protect the neighbors’ homes from also catching fire. I don’t know if they would put the fire out or not. Maybe the would do like emergency rooms do and accept all comers, but who knows. Maybe the Firefighters Charitable Foundation would pay for the costs of protecting the uninsured.

Do you see how this system could be effective using methods that are already in use in other areas of property insurance? Do you see how voluntary transactions are better than threats of violence inherent in property taxes, sales taxes, and levies?

Ah, you ask, but what about renters? Well, the principles are much the same. The landlord would be required by their lien holder to have fire insurance. If the landlord owned the property outright and opted not to pay for fire insurance I doubt anybody would want to live there. But for the sake of argument, let’s say someone did. They would be able to obtain renter’s insurance (just like renters do now) and they would be able to order coverage that included a fire protection clause. Maybe such a policy would cover the costs of fighting a fire anywhere in the building, maybe it would only cover the cost of protecting the individual unit from damage, maybe something else. Who knows? The only way to find out is to try it.

One final consideration I’d like to offer is an economic one. It’s almost certain that a free-market fire protection system would be cheaper than the current government monopoly system. One big reason is that it’s not at all clear to me why firefighters should be so expensive to hire, given that so many people are willing to fight fires for free. Approximately 70% of firefighters in the United States are volunteers already. Why should we keep paying monopoly prices to the people calling themselves the government for their mediocre fire protection service, especially since only 5% of fire department calls are for actual fires!