There is a huge crisis in the auto insurance sector that is spreading like bushfire all over the nation. But, who is to blame for this fiasco? It is the flawed no-fault insurance system, state insurance experts.
All the auto insurance problems are due to the faulty system in no-fault insurance and this is the root of the problem state critics. There is widespread auto insurance fraud in states like Florida due to the no-fault insurance. Some of the insurers have reduced the amount of business they do here due to the widespread fraud.
If urgent steps are not taken, the entire no-fault insurance system in New York will collapse, state industry experts.
The rise in personal injury protection claims in Michigan is due to the no-fault insurance. This has put auto insurance premiums out of bounds for most of the urbanites here.
There are around twelve states that have the no-fault insurance laws. As per the no-fault insurance laws policyholders would be entitled to recover part of the medical costs from their insurers after an accident. Insurance companies will have to pay up regardless of who is at fault at the time of the accident. This way, policyholders are also prevented from pressing charges unless the injuries sustained are very serious and meet the threshold of severity.
No-fault laws were implemented by states in order to ensure that policyholders could get prompt payments to cover their medical costs without having to wait endlessly to determine who was at fault at the time of the accident.
This was also done to prevent the ambulance-chasing attorneys from overcrowding the court rooms with these smaller claims.
However, these no-fault laws have had unforeseen consequences. The auto insurance costs are all being driven up in some of the no-fault states due to the rise in medical fees, fraud, the growing number of lawsuits etc.
Motorists in no-fault states are expected to purchase the PIP cover or the personal injury protection cover that will cover the medical costs of the injured driver as well as the other passengers up to a particular level depending on the coverage.
Walter Dartland who is the executive director of Consumer Federation of the Southeast as well as a former deputy attorney-general in Florida stated that no-fault laws were brought in as a humanitarian approach in order to facilitate those who did not have health insurance, to be able to avail treatment. But, getting motorists to purchase the PIP cover has had negative consequences.
