The crisis in the auto insurance sector seems to be spreading at a very fast pace across most of the states in the US. But who is to blame for this? According to experts it is the flawed insurance system that needs to be blamed for this they say.
The no-fault insurance system seems to be the cause for all of these problems in the auto insurance sector. Due to the no-fault system that is being blamed for the fraud that is widespread in Florida, some of the insurance companies have decided not to do business here.
According to experts, New York’s no-fault insurance will have to see some changes or it may well go beyond repair. The Personal Injury Protection claims have been swelling in Michigan and this has led to the car insurance premiums being out of bounds for most of the residents here.
There are around 12 states along with Puerto Rico who have no-fault laws. Under the no-fault law insurers will have to provide cover for the basic medical costs and damages regardless of who is at fault. Under this law the injured can only sue for pain and suffering if they come under a certain category of severity of injuries.
These states had adopted the no-fault laws only to ensure that victims involved in auto accidents were able to get prompt medical treatment without waiting to prove who was at fault at the time of the accident. These laws were also aimed at stopping the ambulance-chasing attorneys from crowding the courtrooms with these minor cases.
However, the laws seem to have had unforeseen consequences. The costs in these no-fault states are actually being driven up due to the rising medical costs, fraud, and other generous benefits etc.
Drivers in states with the no-fault laws will have to purchase the PIP cover. This covers medical costs of injured passengers but only up to a certain level. The terms and amount vary from one state to another. PIP in Florida provides only up to $10,000 as coverage for medical costs.
Walter Dartland stated that this was more of a humanitarian approach to help those who had no health insurance cover to avail medical treatment. He is the Executive Director of the Consumer Federation of the Southeast as well as the former Deputy Attorney General in Florida.
But due to the unforeseen consequences of the no-fault laws, Florida has now become the capital for staged accidents.
