The Many Faults of No-Fault Automobile Insurance

March 2000 - The Many Faults of No-Fault Automobile Insurance

by Alonzo T. Stanga

Accountability.

It is a value Americans take seriously—so seriously that our civil justice system is based upon the idea that justice is only served when people who act irresponsibly are forced to compensate those they hurt.

Unfortunately, one bill pending in Congress proposes to lighten the accountability of reckless drivers who cause auto accidents. The "Auto Choice Reform Act of 1999" (H.R. 1475 in the House, S. 837 in the Senate) promotes "no-fault" automobile insurance, an alternative to traditional insurance that some states experimented with in the 1970s.

The liability systems we have now apportion fault, hold negligent drivers responsible and force reckless drivers to compensate innocent drivers for their losses.

On the other hand, no-fault systems require that both innocent and reckless drivers pay for damages resulting from accidents, regardless of who is at fault in an auto wreck.

Under the federal bill's no-fault provisions, innocent drivers must ask their own insurance companies to pay for lost wages, medical expenses and funeral costs. Reckless drivers escape responsibility to pay for other damages, such as the loss of a child or severe disfigurement.

Tim Ryles, former Commissioner of Insurance of the State of Georgia, describes it this way: "If a reckless driver runs a stop sign, hits your car, kills your child, destroys your ability to ever have another child and leaves you a paraplegic, you can never hold the errant driver or his insurance company personally or financially responsible. Ultimately, what you may get-perhaps after having to sue your own insurance company—are your medical expenses, lost wages and funeral costs. Nothing for your child. Nothing for loss of fertility. Nothing for being left an invalid for life."

Supporters of the bill say that implementing no-fault systems would reduce insurance premiums for all drivers in part by eliminating the cost of seeking compensation for less tangible, non-economic damages. In addition, they say lowering the cost of premiums would allow more low-income drivers to buy insurance.

But the experience of two states that experimented with no-fault plans shows that rates will not necessarily go down. Insurance rates in Georgia and Connecticut both fell 6 and 7 percent, respectively, only after no-fault systems were repealed.

Even if no-fault did lead to cost savings, there is no guarantee that insurance companies would pass those savings onto their customers. In addition, drivers in no-fault plans who wanted coverage for those less tangible, non-economic damages (which are taken care of in traditional systems) would have to buy extra insurance, thus raising the total cost of their premiums.

Consumers should take a close look when government entities consider no-fault insurance. We all want lower insurance premiums, but bills like the "Auto Choice Reform Act of 1999" do not give good drivers much of a choice . It only makes it more likely they will pay for the reckless behavior of bad drivers.

That leaves the wrong people accountable.

For more information on no-fault auto insurance, see the Web site of the Consumers Union (the non-profit organization that publishes Consumer Reports.

Alonzo T. Stanga, chairman of the Auto Torts Section of Louisiana Trial Lawyers Association, is a partner in the law firm Stanga & Mustian, P.L.C., of Metairie.

Louisiana Trial Lawyers Association, a statewide voluntary bar association, is concerned with the rights of individuals in the areas of consumer protection, criminal litigation, injuries to one's person or property and other basic rights.

Reprinted with permission of Louisiana Trial Lawyers Association, P. O. Box 4289, Baton Rouge; (225) 383-5554 or (800) 354-6267.