The theory of moral hazard suggests that an insured driver, who bears less than the full cost of a collision, will drive less carefully than an uninsured driver. A recent study suggests that the moral-hazard cost of automobile insurance is substantial. When a state makes car insurance compulsory and thus decreases the number of uninsured drivers, roads become more hazardous: The number of collisions and the number of traffic deaths increase. Roads become more dangerous because the newly insured drivers drive less cautiously. The study estimates that a one percentage point decrease in the number of uninsured drivers increases the number of traffic fatalities by 2 percent. Of course, there are benefits associated with compulsory insurance, but in the interests of efficiency, we must compare the benefits to the costs, including the increase in fatalities on more hazardous roads.