A tiny Russian village near Novgorod was taken hostage for 2 days by 8 armed men. One of the villagers was beaten to death; two more have been hospitalized in a critical condition. You would say, "So what?". Well, the whole fight started over a scratched car - an Audi A8 sedan.
Insurance in Russia doesn't work the same way as in America. After you get into an accident, you call up a police officer. Until he arrives, you can't move the cars. So usually by the time the officer arrives (in about an housr), there are many more wrecked vehicles on the road. After the officer shows up, the interesting negotiations begin.
The officer splits the victims of the accident, listens to their stories, then says "$200 cash now; and you're not guilty". You can say "Yes", you can say "No" - but then the officer goes to another participant. If you said "No", he makes the same offer. If you said "Yes" , the officer says "$300 cash now; you're not guilty". And so the bidding begins.
To insure a Toyota Camry in Moscow for damage and liability, both with the maximum of up to $10,000 would cost you anywhere between $3,000 – 3,500 a year, even if you have perfect driving record and a dozen years of driving experience. However, after each accident you've "used up" your insured amount. That means you have to put in a payment for the used proportion again. Let's say your yearly insurance bill is $3,000, which covers you for a total of $20,000. If you use up $10,000 due to accidents, that increases your premium, and makes you owe another $1,500 to your insurance company.
All of this "works" in the cities, but in distant villages it's hard to get emergency services and police, and people aren't insured anyway. Credit systems don't work, people come and go as they please, and how do you get money from someone who has none? You can go to a Russian court and spend few months of your life fighting through bureaucracy, win the case and the person will be paying you about 20% of their $100 a month salary. So, you'll be getting your $20 a month for as a long as that person is alive and employed. This means that if you have a nice car (let's say brand new Audi A8), and damage is $8,000, it'll take 400 months (over 33 years) to pay for the repairs.
What do you do now? You need to go and get money yourself, quick and dirty. On July 18th, 2005, the little village Lzi, by the city of Novgorod, was terrorized by eight men. Three vehicles rolled into the village with the assailants. The thugs were between the ages of 18 and 42. They were armed with four shotguns, a machinegun, some smaller rifles, knives, a baseball bat, and enough ammunition to kill everyone in town.
The thugs fired shots in the air, then confiscated all the villagers' cell phones and cut their phone lines, so that no one could call for help. Then they set out looking for the person who had scratched the nice car. When they thought they found the guilty group of people, they took them aside to a little wooded area and started to torture them.
After 24 hours of torture, the "guilty" man who confessed died, and two other kidnapped villagers were barely alive. Fortunately, one inhabitant of the village found a hidden cell phone and called the police. SWAT teams and FSB came into the village. After a small war's worth of shooting the car owner and his fellow thugs gave up. The attackers were so drunk, it took a day for them to sober up for questioning by the authorities.
This story is the most extreme case of insurance related lawlessness that I'm aware of. I don't doubt a single fact in it for two reasons:
1) It was reported by all Russian media agencies
2) I have witnessed and suffered accidents in Russia, and I have lived all my life in Moscow.
Russian car insurance works in the Wild West way it's described above - by bribe collecting and brutality.
