No Fault Insurance
Twelve states in the U.S. including District of Columbia, Florida, Kansas, Kentucky, Massachusetts, Michigan, New Jersey, New York, North Dakota, Pennsylvania, Utah and Hawaii have no fault auto insurance policy which means the respective insurance companies of the cars involved in a collision would pay for the respective car’s damages as well as any medical claim due to injury. This is irrespective of who caused the accident i.e. who was at fault. If it is a multiple car collision, other cars would be covered by their insurance companies. Since all motorists are required to have insurance by law, theoretically there should not be any problem.
The no fault system was adopted by these states with the aim of decreasing legal and administrative costs of insurance claims. The drivers involved in an accident are guaranteed medical treatment. Though the no fault system should drive the premiums down, often liability issues actually increases the premiums.
The no fault system has certain loop holes that allow the parties involved in the accident to go to court. For example if the injuries are beyond certain predefined severity or if the total cost is prohibitively expensive above a limit the aggrieved party can sue the other.
An interesting case that happened in one of the no fault system states is described below.
A four plex apartment building had a wide driveway and a wide garage with the result that backing up of the car into the street was not required when taking out. One could take a turn in the driveway itself. One Sunday afternoon, a tenant was backing her car out of the driveway when she encountered a bump and heard a thud and a scream. When she came out of the car, she was shocked to see a woman under her car and got scared. She had run over a neighbor sun bathing in the driveway. She panicked and called 911 for help.
When help arrived, they discovered that the car had run over a woman in the abdomen region. Fortunately the victim did not have any serious injuries and was feeling fine. But she was still taken to nearby hospital but was found to have no broken bones or any internal injuries. Just a tire mark across her thigh and stomach.
The driver however felt miserable of having caused the accident and called up her insurance company about the accident. The insurance company wanted to know if her neighbor owned a car that had an insurance coverage. Since indeed she had, the company said the neighbor would have to file any claims with her insurance company because of the no fault insurance policy in place in that state!
Even though the driver was clearly at fault, her insurance company would not entertain any claim whatsoever because of the no fault policy. She even went to the extent of telling her neighbor to sue her for causing the accident but the neighbor merely responded saying it was only an accident!
Interesting no fault system, is it not?
