No fault laws are gaining popularity as US citizens are demanding more tort reform in their states. No fault insurance is typically associated with automobile claims. With such insurance, when an accident occurs an injured party’s own insurance will cover for some portion of the bodily injury. If the injury exceeds the amount of coverage, the at-fault party will cover the additional damages. Fault will remain an issue for property damage. Many states are different with what the insurance will cover so it is best to consult local counsel.
The main reason for such systems is to reduce the amount of litigation and potential damages from such claims. There is a belief that limiting such claims will result in lower insurance premiums for consumers because they will spend less money defending and paying out the claims. The vast majority of smaller claims where an injured party is not seriously injured are expected to have litigation costs eliminated. However, there is some dispute about whether such goals have actually been reached. The RAND Corporation found that risk assessment is more challenging when fault is not assigned. Typically when such difficulty arises, premiums increase to cover the unknown risk. If this is true, then the insurance industry has profited greatly from this uncertainty. Additionally, the study also found that the medical and auto accident costs are higher in no-fault states. Another major criticism is that the coverage is so low and the range of what is covered under the no-fault system is extremely limited. Those with serious injuries now have a two-step process to obtain damages because they will have to go to court anyway to get the excess damages and any other claims not covered through no-fault insurance.
It seems as though most states are not convinced of the benefits of no-fault systems as only about a dozen states have some sort of system in place. In these states, the only option is no-fault coverage. Many states that adopted such systems have repealed them. The rest of the states either offer a choice for the consumer or have mostly at-fault systems in place. Michigan is unique in the fact that it offers unlimited no-fault coverage and as a result has the highest premiums in the nation. The legislature is considering changes as it is believed the rising costs are unsustainable in the long run.
However one state, Florida, seems to have a positive result from making the transition. The state has seen a reduction in the amount of phony accident claims. To reduce the instance of fraud, the state requires that injured parties seek medical treatment within a narrow timeframe.
This article is for general informational purposes only and is not to be construed as legal advice. Do not rely on the above information as all cases are different and different laws apply to different cases. Consult an attorney in your area for further guidance. If you were injured in an auto accident please call one of our attorneys at David K. Kremin & Associates, and we will give you a free consultation. We never charge unless we collect for you. Please call 1(800) ASK-A-LAWYER or 1(800)275-2529.