The crisis in the auto insurance sector has been spreading all across the states in the US and this is largely due to the flawed no-fault insurance system in most of the states say insurance experts.
Critics state that the no-fault insurance system is the root of the crisis in the auto insurance sector. Some of the insurers have stopped doing business in Florida due to the widespread auto insurance fraud because of the no-fault insurance system there.
Experts state that if adequate reforms are not brought in at the earliest, the no-fault system in New York will soon reach a stage that would be beyond repair.
Michigan has seen a steep rise in the personal injury protection claims due to the flawed no-fault insurance system. Auto insurance premiums have gone way beyond reach for most of the urbanites due to this flawed system.
Puerto Rico as well as 12 other states has the no-fault insurance laws. As per these laws, policyholders can recover some of the expenses from their insurance companies, if they are involved in an accident. Due to the no-fault insurance, they cannot sue for pain and suffering and can do so only if the injuries sustained are very serious in nature.
These no-fault laws were accepted by these states in order to help accident victims get immediate payment to be able to cover medical costs without having to wait endlessly to determine who was at fault or who caused the accident. However, though these laws were intended to stop the ambulance-chasing lawyers from overcrowding the courtrooms with cases that have smaller claims, in reality this whole effort of having the no-fault system has been counterproductive.
Now, the costs of auto insurance in the no-fault states are actually being driven up due to the rising medical costs, fraud, increasing number of lawsuits, generous benefits etc.
There are four states that have remained in the spotlight due to auto insurance fraud and they are New York, Florida, New Jersey, and Michigan.
Motorists in the no-fault states are expected to purchase PIP or personal injury protection insurance cover. This helps in covering medical costs for the driver as well as the passengers to a certain level. However, the terms of coverage as well as the amount varies from one state to another. For instance, Florida provides coverage of up to $10,000 in its PIP cover for medical costs. But the purchase of PIP has had certain unintended consequences.
