What was wrong with No Fault

[drachillix]

Originally posted by blowero *
**
Maybe I’m not understanding this right, but if there’s “no fault”, doesn’t that mean that Joe Crackhead, who’s caused, let’s say, 15 accidents, is going to be paying the same insurance rate as Jane Goodygood, who has caused zero accidents?*

Assigning fault for insurance rates and licence suspension purposes would probably stay the same, just that you could not sue for P&S. If we paid at the pump then yes we would be subsidizing the crackheads. Thing is people who get in serious car accidents usually only get to do it a couple times before darwin catches up and removes them from the gene pool.

And how do you know it would only be $10 a month increase?**

I don’t just tossing a round number. If all 300,000,000+ US citizens had car insurance and 1,000,000 had DUI’s its a hell of a lot easier to get all of us to swallow a $2 a month increase in premiums than to get the people with a DUI’s to shell out $600/month. They are the minority so subsidizing them to encourage them to at least have insurance is a pretty easy fix for the bottom line at an insurance company. So most likely, we already subsidize the crackheads, why not create a situation where the crackhead can’t get rich by suing you.

[blowero]

*Originally posted by december *
Right, punitive damages are rare. However, pain and suffering is pretty automatic. In practice it’s a multiplier. E.g., one might add the specific damages for medical care, wage loss, etc and then multiply the sum by 3 for “pain and sufferering”. The optional alternative offers drivers a lower premium in exchange for not collecting a multiple of their financially-measurable loss. First of all, a cap would be unfair to the most deserving, i.e., the severly injured. States with partial no-fault have a threshhold, so that small claims can’t sue, but serious ones can.

But you haven’t explained why it is necessary to have no-fault insurance in order to have such a system. If you want to limit damages for small claims, just do it. Why do we have to foul up the rest of the insurance system? There seem to be 2 issues here: 1.) Whether the responsible party or the victim should pay, and 2.) Tort reform. I see them as two seperate issues. I’m all for tort reform, but I’m not sold on no-fault insurance.

This idea of offering a choice is interesting. We still haven’t heard from anyone in these “partial no-fault” states, have we? Is the system working well there? When the issue came up in California, I believe it was presented as all-or-nothing: you either voted for pure no-fault insurance or you didn’t.

In practice, no fault is more fair to severely injured. The tort system tends to underpay them

So what you’re saying is, the current system in which one usually gets 3 times their out-of- pocket expenses is no good, and that small claims should get NO pain and suffering, while severely injured should get MORE than 3 times their expenses? Pardon me if I don’t sign up for that.

Furthermore, it’s hard to impossible to switch to pure no-fault, because of resistance from the attorneys. It’s easier to offer drivers a choice (although the attorneys resist that, too.)

It’s not just attorneys who oppose it. No-fault was soundly defeated in California by popular vote. You make it sound like greed is the only reason to oppose no-fault insurance. That’s not true.

No-fault saves a lot of money in convenience of no haveing to sue.

How does convenience save money? Besides, I have been driving for over 20 years, and I have never had to file a lawsuit. But the one time I did have an insurance company try to stonewall me, I needed to have the threat of a lawsuit as motivation to get them to offer a reasonable settlement.

No fault rewards defensive driving

I disagree. How careful are drivers going to be if they know they can never be found at fault for an accident?

A big part of low accident frequency is how much one drives and where. These factors are relected in no fault loss experience and rates

???

[december]

• blowero*, we do not disagree. My post was about how the system works, rather than what I would prefer.

But you haven’t explained why it is necessary to have no-fault insurance in order to have such a system. If you want to limit damages for small claims, just do it. Why do we have to foul up the rest of the insurance system? There seem to be 2 issues here: 1.) Whether the responsible party or the victim should pay, and 2.) Tort reform. I see them as two seperate issues. I’m all for tort reform, but I’m not sold on no-fault insurance.

I totally agree. As I said, the people who planned New York state’s no-fault system 30 years ago agreed among themselves that the best answer was to simply eliminate tort liability from automobile accidents. I agree with them, for reasons laid out by Professors Keeton and O’Connell. They demonstrated in great detail that the tort system is unfair and inefficient as it applies to automobile accidents.

So what you’re saying is, the current system in which one usually gets 3 times their out-of- pocket expenses is no good, and that small claims should get NO pain and suffering, while severely injured should get MORE than 3 times their expenses? Pardon me if I don’t sign up for that.

Actually, a problem with the current system is that severely injured people are often forced to settle for amounts far below 3 times their expenses. They need the money right away, so they’re in a weak negotiating position.

How does convenience save money?

By convenience, I really mean efficiency. I.e., what percentage of the insurance claims dollar goes to pay benefits, rather than expenses?

Besides, I have been driving for over 20 years, and I have never had to file a lawsuit. But the one time I did have an insurance company try to stonewall me, I needed to have the threat of a lawsuit as motivation to get them to offer a reasonable settlement.

Sad, but true. OTOH medical insurance is generally paid without a lawsuit (although delay is not uncommon.)

How careful are drivers going to be if they know they can never be found at fault for an accident?

Under a fault system, a driver is surcharged for an accident, unless it’s shown to be not his fault. Under no-fault, a driver is surcharged for every accident. Either way there’s a financial incentive not to have an accident. Not to mention, the risk of harm, inconvenience, policy deductibles, etc.

[blowero]

*Originally posted by drachillix *
Assigning fault for insurance rates and licence suspension purposes would probably stay the same, just that you could not sue for P&S.

I don’t see that anywhere in the link you posted earlier. How are you making that assumption?

If we paid at the pump then yes we would be subsidizing the crackheads. Thing is people who get in serious car accidents usually only get to do it a couple times before darwin catches up and removes them from the gene pool.

So you are counting on them killing themselves before they are too much of a drain on the insurance company? Don’t they have to pay a death benefit?

I don’t just tossing a round number. If all 300,000,000+ US citizens had car insurance and 1,000,000 had DUI’s its a hell of a lot easier to get all of us to swallow a $2 a month increase in premiums than to get the people with a DUI’s to shell out $600/month. They are the minority so subsidizing them to encourage them to at least have insurance is a pretty easy fix for the bottom line at an insurance company. So most likely, we already subsidize the crackheads, why not create a situation where the crackhead can’t get rich by suing you.

I don’t believe insurance companies are currently giving a break to people with DUI’s. On the contrary, they have to pay much higher rates. In my opinion, that’s how it SHOULD be. I don’t see how no-fault would make the uninsured get insurance. Telling people they can’t be sued sure as hell isn’t going to encourage them to get insurance.

A final point here. In my dealings with insurance companies, I have often found them to be much more interested in profit than in reaching a fair settlement. If we take away the ability to litigate, then they will have NO incentive whatsover to be fair - we would be completely at their mercy. If you get in a serious accident, do you really expect your insurance company to pay you what you deserve, just out of the goodness of their heart?

[drachillix]

*Originally posted by blowero *
I don’t see that anywhere in the link you posted earlier. How are you making that assumption?

Well I wouldn’t expect the department of motor vehicles to just close up shop and go home… They still control who gets a licence and or loses is. I’m quite sure they would still use thier little point systems. Since insurance currently use that data to determine risk they would still continue to do so. If I was an insurace company I would charge people who had tickets and accidents higher premiums due to the higher risks incurred. No Fault does not = No cost.

So you are counting on them killing themselves before they are too much of a drain on the insurance company? Don’t they have to pay a death benefit?

How much is the question? Wrongful death lawsuits have gotta be ugly. My guess, 1 year of that persons salary.

I don’t believe insurance companies are currently giving a break to people with DUI’s. On the contrary, they have to pay much higher rates. In my opinion, that’s how it SHOULD be. I don’t see how no-fault would make the uninsured get insurance. Telling people they can’t be sued sure as hell isn’t going to encourage them to get insurance.

How much more likely is it that a serious alcoholic is going to be involved in an accident? Double? Triple? Do they have double and triple the insurance rates? Tomorrow I will go hit an insurance site and get an estimate for me with an without a DU. I bet it is no more than $100 a month more for me.

If we take away the ability to litigate, then they will have NO incentive whatsover to be fair - we would be completely at their mercy. **

Nope actually I would think everything would be far more fair. No negotiation, car repair bill paid, medical bills paid, lost wages covered. All of these things are pretty much black and white. A pure comissioned sales person could be done as an average of the last 12 months or something like that. So how does this leave us at their mercy?

[blowero]

*Originally posted by drachillix *

Well I wouldn’t expect the department of motor vehicles to just close up shop and go home… They still control who gets a licence and or loses is. I’m quite sure they would still use thier little point systems. Since insurance currently use that data to determine risk they would still continue to do so. If I was an insurace company I would charge people who had tickets and accidents higher premiums due to the higher risks incurred. No Fault does not = No cost.

Well, we are not talking about tickets - that’s a seperate issue, and would remain the same. What we are talking about is how the number of at-fault accidents affects your rate. The way it works now is, if I rear-end Joe Blow, he will make a claim on my insurance company, who will most likely raise my rates as a result. Hence, I am “punished” for being a dangerous driver. If Joe rear-ends ME, I will make a claim on HIS insurance, and HIS rates will go up, while mine should remain the same, since I was not at fault.

If we have a no-fault system, and we only go by “point-count” as you suggest, then aren’t we relying on everybody to file a report with the DMV every time they have an accident? If I’m not mistaken, people rarely file those reports. If insurance companies are no longer paying out to the other party, but rather are only paying their own insured, do you really think they will give a rat’s behind who was at fault? I doubt it - they will just raise YOUR rates whenever you have an accident. So if some idiot runs a red light and hits you - YOUR rates will go up. Yeah, great plan.:rolleyes:

How much more likely is it that a serious alcoholic is going to be involved in an accident? Double? Triple? Do they have double and triple the insurance rates? Tomorrow I will go hit an insurance site and get an estimate for me with an without a DU. I bet it is no more than $100 a month more for me.

ONLY $100 a month? That’s MY entire auto insurance cost. Besides, I don’t get your reasoning - it seems like you’re saying that since drunk drivers aren’t being charged ENOUGH, we should eliminate fault, charge them LESS and charge everyone else more.

Nope actually I would think everything would be far more fair. No negotiation, car repair bill paid, medical bills paid, lost wages covered. All of these things are pretty much black and white. A pure comissioned sales person could be done as an average of the last 12 months or something like that. So how does this leave us at their mercy?

Who is going to make this “black and white” determination? Some government agency that they will have to form? Those aren’t free, you know. Or are you trusting the insurance company to give you a great payoff just because they love you? I’m just very skeptical about politicians who have some great idea to change the system, and tell you how it’s going to be more fair AND save you money and a chicken in every pot and 2 cars in every garage and we’re finally gonna stick it to those evil trial lawyers. Let’s see the proof.

[catsix]

So let me get this straight. If ‘No Fault’ is implemented and I am stopped at a red light with brake lights on and someone behind me does not slow down, causing them to hit the back of my car, then the accident is charged against me and the other driver, despite the fact that I did nothing to cause the accident? Now since my insurance company has to pay out to fix my car and me for the accident, they raise my rates, thereby punishing me for being the victim of someone else’s careless driving. So now my car is out of commission, I’m out of commission, I’m out of pocket more money, because I was minding my own business stopped at a red light.

How is this good for me?

[St.Urho]

*Originally posted by gazpacho *
**I believe that Michigan has no fault insurance. Anybody in Michigan want to comment on how it is working? **

I’m a college student, so my truck is still registered in Michigan. I personally haven’t had any problems with it. I haven’t heard of any widespread complaints or attempts to change the system, either.

Catsix I have been in two accidents where I was not at fault, and in neither case were my rates raised (they did go up after my speeding ticket, of course).

If you want more information, here’s two good sources:
Farm Bureau Insurance No-Fault FAQ
Brief Explanation of Michigan No-Fault Insurance Warning-- PDF

[blowero]

QUOTE]*Originally posted by JohnBckWLD *
**It’s called choice no fault as described on an (admittedly partisan)website that explains all types of no fault laws throught the Unending Suits in America

From the CSE website
“Choice” no-fault plan. Recognizing that to many people, no-fault laws represent an attempt by government summarily to deprive them of cherished tort rights, policymakers in three states — New Jersey, Pennsylvania, and Kentucky — have introduced a no-fault option while simultaneously preserving a tort option for drivers who prefer the traditional tort liability system of accident compensation. New Jersey and Pennsylvania provide a modified no-fault option that incorporates a verbal threshold restriction on the right of an injured motorist to sue an at-fault driver for noneconomic damages. Drivers selecting the tort option, on the other hand, retain an unrestricted right to bring liability lawsuits.
Thus, while no-fault drivers in “choice” states have only a limited right to sue, they are nonetheless vulnerable to unrestricted liability lawsuits in the event of an accident with a tort driver. This means that from an individual insurer’s standpoint, tort-system customers are more lucrative than are those who choose no-fault. Tort drivers can be charged more because they retain their ability to sue for liability, yet because they generally cannot be sued by no-fault drivers, they are less costly to insure than they would be under a comprehensive tort system, where every driver can sue every other driver."

Not perfect, call it a tort-lover’s tax / premium if you will…you want the right to sue you pay more for it. Until this country comes to grips with the true cost of these insane damage awards, caps punitive damages and accepts the English rule, I see no other proposal that comes close. **
[/QUOTE]

I finally got around to reading your link. Do you realize that the CSE website you quoted is AGAINST the “modified” no-fault system that you are advocating?

*Historically, no-fault laws have failed to deliver the benefits promised by their supporters, largely because legislators and regulators invariably yield to the temptation to re-introduce fault into their ostensibly no-fault systems. In many no-fault states, economic loss “thresholds” were added on the theory that people should retain the right to sue those responsible for serious accidents. By permitting an accident victim to sue for pain and suffering when a threshold is exceeded, these “weak no-fault” laws undermined the fundamental principle that no one in a no-fault system is supposed to be liable for someone else’s loss. *

CSE is of the opinion that only a “pure” no-fault system can be effective. Their proposed system allows NO pain & suffering awards at all - ever, yet they go on to criticize the current system for not paying severely injured people ENOUGH.
They have this to say as well:

*After a quarter century of experimentation, two things seem clear. First, the various modified forms of no-fault auto insurance have not reduced premiums, and in some states premiums have increased. *

Hmmm…give up the right to sue, no pain & suffering compensation, AND higher rates. Wow! Such a deal. What CSE is saying is, “Yeah, no-fault hasn’t worked, but that’s because they didn’t go far enough with it”. Sorry, but I’m not convinced. Why don’t they just admit that it’s a bad idea altogether?

[blowero]

Oops, sorry for the code snafu on my last post - I hope it was clear anyway. I used to preview all my posts, but this site is so &@%# busy, it already takes me about 3 tries just to get my message to go through. If I preview, it takes about 6 tries. Anyway, this is the wrong forum for griping, so I’ll shut up now.

[december]

*Originally posted by blowero ***Hmmm…give up the right to sue, no pain & suffering compensation, AND higher rates. Wow! Such a deal. What CSE is saying is, “Yeah, no-fault hasn’t worked, but that’s because they didn’t go far enough with it”. Sorry, but I’m not convinced. Why don’t they just admit that it’s a bad idea altogether? **

There are two reason no-fault hasn’t saved money. Both would be cured by the alternative of simply abolishing the right to sue for auto accidents.

1. Current systems have a threshold above which one can sue. The threshold may be a monetary amount of damages or a “verbal threshold” – a claim of a certain degree of injury. Thresholds are very low. As a result, those injured have the best of both worlds. They automatically get no-fault benefits and can still sue if they want to.

2. The current no-fault system mandates schedules and procedures for reimbursement. In practice, the procedures have permitted massive fraud rings to operate. As I cited above, it’s estimated that the cost in New York is equivalent to $250 for every driver in the state.

Under the simple abolishing of the tort system, premium levels would plummit. However, this will never happen. The savings would come out of the pockets of lawyers. They have killed every effort in this direction and will continue to do so.

[blowero]

*Originally posted by december *
**There are two reason no-fault hasn’t saved money. Both would be cured by the alternative of simply abolishing the right to sue for auto accidents.

And why couldn’t you just do that WITHOUT mandatory 1st-party coverage? I still see two issues: 1) Whose insurance company pays? and 2) Should you have the right to sue? What does one have to do with the other?

Is there even any kind of consensus among no-fault advocates as to how it would operate? December, this is what you said:

A bad driver wouldn’t have his rates increased because of losses he caused to others, but he would be be surcharged by losses to himself and his vehicle.

But drachillixsays:

Assigning fault for insurance rates and licence suspension purposes would probably stay the same

Which is it? I personally do not like the idea of being “surcharged” for someone else’s bad driving. In the last 10 years or so, I have been rear-ended at least 5 times (once in a fast food drive-though, for Pete’s sake), and backed into once. In that same period of time, I have never been at fault in an accident. Why should MY rates go up because of some clowns who can’t look where they’re going? It’s pretty hard to avoid being backed into in a parking garage via defensive driving when I am STOPPED.

I haven’t heard a coherent explanation yet of how this “pure” no-fault system would work. Do my rates go up every time I have an accident? Who decides how much money I get if I am injured? What if my insurance company screws me over and doesn’t give me a fair settlement? What is my recourse? It’s nice to say “La, la, it’s gonna be so much more efficient and fair, and everyone will live happily ever after”, but how is it going to work in the real world?

2. The current no-fault system mandates schedules and procedures for reimbursement. In practice, the procedures have permitted massive fraud rings to operate. As I cited above, it’s estimated that the cost in New York is equivalent to $250 for every driver in the state.

So the current “compromised” no-fault system is still subject to fraud. How does “pure” no-fault eliminate fraud? Please explain.

Under the simple abolishing of the tort system, premium levels would plummit. However, this will never happen. The savings would come out of the pockets of lawyers. They have killed every effort in this direction and will continue to do so.

So the conspiracy of the big bad lawyers wanting to get rich is what is keeping pure no-fault from coming to fruition? Isn’t Ralph Nader strongly opposed to no-fault? I always thought of him as being about as much of a consumer-advocate as you can get.

[JohnBckWLD]

*Originally posted by blowero *
**So the conspiracy of the big bad lawyers wanting to get rich is what is keeping pure no-fault from coming to fruition? Isn’t Ralph Nader strongly opposed to no-fault? I always thought of him as being about as much of a consumer-advocate as you can get. **

He’s as filthy as the trial lawyers who line his pockets. Here’s what a (supposed) ally from the Green Party documents with reference to all his tax-sheltered groups.

[december]

*Originally posted by blowero *
And why couldn’t you just do that WITHOUT mandatory 1st-party coverage?

As I meant to say, the reforms I’d like to see would be better achieved without mandatory first party coverage. I think we agree on this point.

I still see two issues: 1) Whose insurance company pays? and 2) Should you have the right to sue? What does one have to do with the other?

I again agree. My point was that this solution is considered politically infeasible.

Which is it?

Chances are it would be both. Drivers would be surcharged for accidents and for driving violations. However, for each driver surcharged, many others would have their rates reduced. The surcharge prcedure is not designed to bring in extra premium.

I personally do not like the idea of being “surcharged” for someone else’s bad driving.

I don’t blame you. It’s possible that the experience rating plan might exclude this sort of accident.

I haven’t heard a coherent explanation yet of how this “pure” no-fault system would work. Do my rates go up every time I have an accident?

Rates are set based on group characteristics, such as territory, age of driver, etc. Then individual rates are adjusted up or down based on a point system. Those with accidents or tickets get points, so their rates go up. Drivers without tickets and accidents have points taken away, so their rates go down.

Who decides how much money I get if I am injured?

Under pure no-fault, your own insurance company does. (Just as your health insurance company does now.)

What if my insurance company screws me over and doesn’t give me a fair settlement? What is my recourse?

Same remedies as you have against your current health insurer.
– Sue them.
– Ask them to review their decision (this has worked for me),
– go to the State Insurance Dept.,
– look up their reputation before you select your company.

So the current “compromised” no-fault system is still subject to fraud. How does “pure” no-fault eliminate fraud? Please explain.

The rules in, e.g., New York State allow an allegedly injured driver quite a bit of time (2 or 3 months IIRC) to get medical treatment before reporting the claim to their insurance company. During this period, the con-men send their drivers for (supposedly) hundreds of medical treaments. By the time the insurance company is first notified, it’s too late to act.

These rules are set by the state. Under pure no-fault, the companies could set new rules that would allow them to prevent this type of fraud.

Isn’t Ralph Nader strongly opposed to no-fault? I always thought of him as being about as much of a consumer-advocate as you can get.

Sadly, Nader opposes rich and powerful businessess, but he’s in the pocket of rich and powerful law firms. Go figure.

[blowero]

*Originally posted by december *
As I meant to say, the reforms I’d like to see would be better achieved without mandatory first party coverage. I think we agree on this point.I again agree. My point was that this solution is considered politically infeasible.

So you basically are in favor of changing the whole concept of the auto insurance industry, even though you don’t think it’s a good idea, just because of a belief that maybe we can get some tort reform along the way? It seems to me that those kind of compromise solutions don’t tend to work very well. Is tort reform really “politically infeasable”? Aren’t the same people (lawyer lobby) who oppose tort reform ALSO the ones who oppose no-fault insurance? Why is one politically infeasable, while the other isn’t?

Chances are it would be both. Drivers would be surcharged for accidents and for driving violations. However, for each driver surcharged, many others would have their rates reduced.

That’s the claim, but then it was “claimed” that my utility bills would go down in California, but that didn’t happen, did it? Sorry, but I’ve learned to be skeptical when politicians tell me my rates are going to be reduced.

It’s possible that the experience rating plan might exclude this sort of accident.

might?

quote:

I haven’t heard a coherent explanation yet of how this “pure” no-fault system would work. Do my rates go up every time I have an accident?

Rates are set based on group characteristics, such as territory, age of driver, etc. Then individual rates are adjusted up or down based on a point system. Those with accidents or tickets get points, so their rates go up. Drivers without tickets and accidents have points taken away, so their rates go down.

That’s how it works NOW. What I meant was, do my rates go up for an accident for which I was not at fault? “Maybe” isn’t good enough for me.

quote:

Who decides how much money I get if I am injured?

Under pure no-fault, your own insurance company does. (Just as your health insurance company does now.)

And then will they raise my rates after paying, even though I wasn’t at fault?

Same remedies as you have against your current health insurer.
– Sue them.

Just a sec - I thought the whole point here was to eliminate lawsuits. I could have sworn you were advocating a system that does not allow lawsuits. Did I misunderstand?

– Ask them to review their decision (this has worked for me),

It works because they know that you could sue them. They would rather give you what’s fair than have to defend a lawsuit. If you take that away, where’s the incentive to be fair?

– go to the State Insurance Dept.,

So disputes will be handled by the Insurance Commissioner, rather than the courts? Who’s paying for them to handle all the added complaints that will result from disallowing litigation? I don’t know about other states, but in California we have had BIG problems with the Insurance Commissioner. I kind of doubt he’s going to be much help.

– look up their reputation before you select your company.

That’s a good idea, but I still know people who have been treated unfairly from time to time by companies with supposedly good reputations.

quote:

So the current “compromised” no-fault system is still subject to fraud. How does “pure” no-fault eliminate fraud? Please explain.

The rules in, e.g., New York State allow an allegedly injured driver quite a bit of time (2 or 3 months IIRC) to get medical treatment before reporting the claim to their insurance company. During this period, the con-men send their drivers for (supposedly) hundreds of medical treaments. By the time the insurance company is first notified, it’s too late to act.

These rules are set by the state. Under pure no-fault, the companies could set new rules that would allow them to prevent this type of fraud.

No offense, but that’s extremely vague. What new rules? How do they prevent fraud? Why is 1st party coverage a necessary precursor to setting these rules?