Whatever happened to no-fault? - no-fault automobile insurance

Washington Monthly, April, 1986 by Peter Spiro, Jeffrey O'Connell

Moving on to 4), the punitive effect of the tort system is undermined by the fact that almost all court awards are covered by a wrongdoer's insurance, with the result that a negligent driver will feel the brunt of his sins only marginally in the form of hiked insurance premiums. Not surprisingly, comparisons of fault and no-fault jurisdictions show no statistically significant difference in the number of accidents. In the case of the criminally reckless driver, the proper solution is vigorous enforcement of criminal laws. If a drunk or excessively careless driver poses a serious menace to society, he ought to lose his driver's license or even go to jail.

The arguments that carry the most weight with the public, legislators, and state judges are those based on the "right to sue' and the alleged higher cost of no-fault. Local courts in Washington, D.C. and Florida have declared threshold requirements unconstitutional insofar as they discriminate against some claimants' opportunities to collect damages for "pain and suffering.' (The issue is now moot in D.C., where the city council recently gutted its no-fault statute.) Although several consumer groups, including the Consumers' Union, the nation's largest, have come out squarely behind the expansion of no-fault, other consumer advocates--most notably, Ralph Nader --have avoided the issue, most likely because it conflicts with the notion that the right to a day in court is fundamental to keeping misbehavior in check. This is certainly true when General Motors is building Corvairs that are killing people; we wouldn't want manufacturers to escape liability for products that cause the rest of us serious harm. But the case of the lone driver, whose limbs are as much at risk as those of whomever he hits, is qualitatively different. Moreover, the success of no-fault in Michigan shows that a tough no-fault law can still leave room for those with the greatest claim of "pain and suffering' to go to court and receive additional compensation for serious disfigurement. Such people may deserve special treatment in our society, and a properly written no-fault law can accommodate them.

In addition, there's a precedent for denying court access to potential tort claimants as long as they are granted other benefits in return: worker's compensation. Worker's comp laws deprive employees of the right to sue employers for injuries occurring at the workplace but do guarantee victims adequate, if not particularly extravagant, compensation regardless of questions of fault. All 50 states now have such statutes, and imperfect though they may be (see "Adding Insult toInjury,' Teresa Riordan, March 1984); nobody is suggesting a return to fault-based in that area.

As for the cost problem, it is true that car owners in some no-fault states have seen substantial increases in their insurance bills. This has been the primary reason for the repeal of no-fault laws in Nevada, Pennsylvania, and the District of Columbia. But inflated premiums are only the logical result of introducing no-fault without correspondingly restricting the right to use. No-fault proponents have never pretended that you could save money unless access to courts was severely restricted. And, in fact, in the states with restrictive verbal thresholds--Florida, Michigan, and New York--insurance rates have been less than they would have been had no-fault not been enacted.