Much theorizing about the provision of non-state services considers the idea of insurance.
Insurance is there to minimize the risk of certain events, where the cost of the event is high and the likelihood low. We may be familiar with accident insurance, health insurance, or fire insurance. But what about national defense insurance or local security insurance?
The cool thing about insurance is that it incentivizes best practices. How so? Because bad practices can often be costly. For example, if you smoke, your health insurance premiums will increase – thus incentivizing the healthy practice of not smoking. In the case of local security insurance, then, having locks on your doors and a working burglar alarm may lower your premiums too.
Private police forces may also invest in insurance, to protect against damages in legal actions brought in response to police abuses.
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In Wisconsin . . . an insurer in 2002 recommended new training and supervision of SWAT teams in the Lake Winnebago area in the aftermath of two botched drug raids. In 2010, a police chief in Rutledge, Tennessee, was fired to appease the town’s liability insurer after assault allegations were leveled against him. In many other states, police forces have been asked to adopt new policies regarding body cameras, strip searches, and use of force.
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Before the threat of losing their insurance materialized, the city [of Irwindale, California] had failed to invest in adequate training for police officers, citing budgetary concerns.