Auto Insurance Rates Are Influenced By No Fault Auto Insurance Laws

Arguments Against And In Favor of No-fault Automobile Insurance

The conventional insurance and tort systems for compensating car crash casualties have been subject to reviews and criticism for a long time. The debate and criticisms of this system revolve around the following issues:

Arguments in Favor of No Fault Auto Insurance

  • A large number of innocent people are not able to collect anything for their bodily injuries claims under the conventional tort system for the simple fact that their bodily injuries are caused by legally uninsured motorists or hit-and run operators.
  • Bodily injuries from car crashes are a society problem for all insured parties regardless if they are at fault or not. · It is very difficult or impossible to determine who is 100% at fault in an auto crash.
  • The conventional tort system has caused a number of serious claims being not paid or underpaid because of lack of adequate insurance coverage. In other instances, there are lots of proofs that many small auto insurance claims are overpaid to avoid lengthy legal cost and settlements.
  •  With the conventional insurance and tort systems a bigger percentage of premium money is used to take care of lawyers, not victims (claims costs and lawyers’ fees).
  • The Conventional tort system is not fast. In some states, delays of 2 to 6 years between an accident and a trial are not uncommon.

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The outcomes of these problems to the conventional systems of compensating car accidents victims have lead to the passage of some sort of no-fault law in over half the states in the United States, besides the District of Columbia and Puerto Rico.  No-Fault States include Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania , and Utah. The idea of nofault insurance is old having been initially proposed in the 30s. However, the first such law was passed in the State of Massachusetts in the early 70s, and most existing laws date to the 1970s. A few additional states enacted laws in the 1980s and early 1990s. But a few other states also terminated these existing laws.

Arguments in Against  No Fault Auto Insurance

The lack of interests of more states adopting no fault insurance laws results from many factors against nofault laws, including the following:

  • No fault insurance laws have not produced lower car insurance rates, perhaps because the right to sue is only modified for insignificant injuries.
  • The conventional insurance and tort systems of compensating auto accident victims do perform very well with most claims being solved relatively fast and out of court.
  • The opportunity to sue, in some states, for pain and suffering has not been popular with lawyers and many operators, who feel such suits are their right.· There are methods to alter the present tort systems, such as limiting lawyers’ fees and increasing the use of arbitration instead of courts.
  • Some of the costs of car accidents tend to be shifted from negligent parties to innocent victims.

posted on Wednesday, April 5, 2017