An article in today's New York Times (here) discusses a Virginia law governing dogs that have been declared dangerous by a court for attacking a person. The dogs go on a public registry, similar to a sex offender registry, and the owners are required to carry a $100,000 liability insurance policy.
The registry seems a bit silly: are people really going to consult the directory and make a housing purchase decision because a dog who has bitten lives nearby? It might be somewhat more useful for someone choosing a jogging route, but if you've never seen the felonious canine where you jog or walk, you probably aren't going to change your behavior based on the small chance that Cujo might jump over the fence when you are passing by.
The liability insurance requirement, on the other hand, is an excellent idea. If you want to own a dangerous dog, why should the rest of us bear the risk? Homeowners insurance often covers dog bites, but many policy have exclusions and, of course, many dog owners are not home owners. I don't have data, but I would hazard a guess that a fair number of "dangerous dog" owners are judgment proof.
The idea of the insurance requirement might even be a way to break the longstanding stalemate over "dangerous breed" regulation. A number of localities have passed laws against the ownership of dangerous breeds — usually pit bulls and Rottweilers. I have no problem with these laws. Dog bites are a serious problem: they send 800,000 people to the emergency room every year, half of them children. And these two breeds are responsible for 1/2 to 2/3 of fatal or near fatal bits, depending on the study. I love dogs (and own one), but I don't think that prohibiting people from owning certain types of dogs is a significant infringement on liberty. I do realize, however, that, as a practical matter, "dangerous breed" laws raise a lot of opposition on the grounds that individual dogs that are properly trained are (usually) not dangerous, regardless of the breed, and that if certain breeds are banned, people who want aggressive dogs will just teach other breeds to be aggressive. So how about a compromise position? If you want to own a pitt bull or Rottweiler you must have liability insurance, just like you must have auto insurance if you want to operate a car.