Here in Louisiana we have mandatory libality insurance. The liability insurance has about a 50% compliance rate, also the poverty rate in LA is about 50%. The rates are very high and I’ve always thought no-fault insurance would be better.
It seems to me that liability insurance is really just a hidden tax on the poor which sends money to lawyers and insurance companies. Lawyers here make a big deal about finding out who is a fault and making that person pay, but this is expensive and runs up the billable hours that lawyers can charge.
So which is better, manditory liability or no-fault, and what kind of auto insurance do you have in your state?
There are no requirements. Several of my clients work in insurance and they told me on a personal level that mandatory insurance is not good, but I don’t remember what the total reasons were.
Not having insurance is such a risk in these days of everyone sues everyone else. Being a married 39 year old with a driving record so clean you could eat off it, I pay next to nothing for insurance. I can image if a guy is single, 20, and has a bunch of tickets and accidents on his record, insurance is a major expense.
My understanding of the best no-fault system is that you aren’t allowed to sue anyone but your own insurance company. (if you have one) So if I crash into you, or if you crash into me, it dosen’t matter who caused the accident. We each make claims with our own insurace if we have it, and if we don’t we just pay our expenses out of pocket. This cuts out the overhead of all the lawyers and companies sueing each other.
BTW I’m 30, live in Louisiana, drive a 95 corolla, have a clear record, and pay about 600$ a year for 5-10-5 liability only with a major name brand carrier.
Auto insurance seems to me to be kind of a weird situation. I can’t think of another type of insurance where your stuff can really be influenced by someone else’s bad actions, where the perpetrator also carries the same kind of insurance. Most insurance plans tend to cover unforseen circfumstances, or “acts of God” (but not insect infestation; never try to collect on an insurance policy because of insect infestation :)).
But the way auto insurance is now, at least in liability states, is that people who just drive around running into people are “punished” for their actions. My insurance covers my actions, yours covers yours. In a no-fault situation, my insurance covers your actions. That seems backwards to me. Shouldn’t people (or their insurance companies) take responsibility for their own actions? Why should people who get hit a lot have to pay higher premiums, instead of those who go around hitting others?
What you sais is basically correct, but I believe that establishing fault causes insurance premiums to rise about 50%. So you are basically paying 50% extra to punish the person who is at fault. Also the “fault” is ften diffcult to assign. In the one accident I have been in I believe I was at fault. I pull out from a stop sign into traffic, but the car that hit me was assigned the “fault” because they failed to maintain control and hit me. (laws in other states may be different, but in LA the person hit hits is a fault)
Also I don’t believe statstically significant numbers of people “just drive around running into people.” When I was poor and drove a $1000 truck I valued it more that my current $7000 car, because at the time I was poor. Now I could easily afford another car. Why would anybody try to cause an accident and damage their car or body, espicially when in a no-fault state there is noone to sue?
I’m not saying the people go around running others for the pure joy and satisfaction of it. I’m just saying that some people tend to hit people more than others. I’m sure, from the way you’re speaking, that you never get in accidents; neither do I. But don’t you know somebody who’s been in quite a few? It’s not intentional, it just happens. But that’s why bad drivers pay higher premiums. It makes sure that the rest of us don’t have to carry the load for their inattention or inexperience or whatever.
Michigan is a no fault state. We’re required by law to carry “PLPD” insurance, not necessary to carry other. When I’ve been in accidents, they’ve all been “the other person totally at fault” (I’ve gotten struck from behind 3 times, twice when I was turning and had signaled my turn, the 3rd time the roads were all ice, I was slowing for the upcoming stop light, he couldn’t even slow down, turn or anything, my car became trunk optional - the front end of his car came all the way through to the back seat).
results: each time MY insurance co fixed my car. I was NOT charged a deductible 'cause the other guy was at fault, MY rates did NOT go up. OTOH, the other drivers in each case were charged the deductible on their insurance and their rates DID go up.
did this info help???
If I’ve read the posts correctly, I think there’s one point that people aren’t appreciating. When you’re in an accident and the other driver’s at fault, yes, your company pays you, but that’s not the end of it. Your insurance company is able to claim that money from the other insurance company, through the principle of subrogation - your insurance company can rely on your loss. That’s why the other driver’s premiums go up, and yours don’t - becuase his insurance company has not only paid covered his loss, but also your loss.
In clear-cut cases, where there’s no doubt about who’s at fault, the insurance companies can just settle it amongst themselves, without ever going to court. Litigation is expensive, and they want to keep their costs down. So you may not ever even know about the settlement they make.
If there is real doubt about fault, you may find that your company sues the other driver, in your name - your insurance policy has a subrogation clause that authorises them to do that.
In a “no-fault” sate, in theory, the premiums s/b 10>20% less (not 50%). But they are not. The insurance co PROFITS are 10>20% higher. If you are a good driver, overall, you insurance “expense” will go UP if no-fault is institued. The ins co keep saying that there will be BIG premium reductions for no-fault, but these have not shown up. For the average driver, there s/b a savings, but not for the good driver.
madatory liab is good if you are a good driver, bad if you are a bad driver- and have something to lose. But if you have no ins, a min wage job, a POS car, no house, etc, then why bother to have ins? It is cheaper to not pay any insurance, then just don’t pay. If there is a big settlement, and they really go after you, go underground or CHPTR 7.
California has mandatory liability insurance. You must show proof of insurance to register your vehicle and be able to present proof whenevr you’re pulled over by the cops. It’s a $500 fine to be driving without it.
To comply with the law (I wish I had my policy here) you only need basic liability. The minimum coverage provides for 16k in damage. I’m not sure about injury.
Now for 64 dollar question. When the mandatory law went into effect, did liablity insurance prices go up or down? Thats right, they went up considerably. And (in the first couple of years) a lot of out of state companies sold policies that complied with the law, but were in fact worthless. (you could not get them to pay a claim)
I don’t speak fluent “insurancese”, and try to keep my contacts with my agent to a minimum, so that info was helpful to me, and not painful (anytime I ask a question of my agent, he tries to sell me something else…)
I understand the main fraud concern of insurance comapnies now is “staged” accidents; driver A arranges for driver B (in another vehicle) to cut him off, resulting in his getting rear-ended by driver C, and driver A gets (big) settlement from driver C’s insurance company. Usually commercial vehicles are the “targets” as in most states they are required to maintain liability, and do so. I’d think that only being able to sue your own insurance company would kill this sort of scam right off, except for the idiot few who would keep doing it and go to jail. You wouldn’t be able to defraud other people’s insurance companies, only your own -who would catch on pretty damn quick. As it is it’s difficult for any one insurance company to correlate multiple identical accidents with any single person who doesn’t have a job and somehow manages to maintain a vehicle and get rear-ended a few times a year. - MC