Most U.S. states have a 'traditional tort' liability system for auto insurance where if you have an accident, you must sue to determine who was at fault. But, nine U.S. states and all Canadian provinces give drivers the option to operate under a "no fault" scheme where persons injured in automobile accidents are limited in their ability to sue other drivers or vehicle owners involved in an accident unless their injuries are particularly severe. No fault insurance is only available in jurisdictions which have a no fault scheme.
No fault insurance has the goal of lowering premium costs by avoiding litigation over the cause of the accident, while providing quick payment for injuries caused by the crash. However, critics of no fault point out that it does not punish reckless or negligent drivers in litigation (because many cases don't go to trial), and that it is particularly difficult to sue if a person's injuries leave them with a handicap. Proponents of no fault insurance point out that auto accidents are inevitable and that at-fault drivers should therefore not necessarily be punished, and that the presence of liability insurance prevents at-fault drivers in tort (or fault) systems from perceiving the lawsuit against them as a punishment.
Critics also point out that many no-fault auto insurance jurisdictions have among the highest auto insurance premiums in the country, although no-fault systems tend to be more popular in areas with higher automobile accident risk.
Several US states have perceived problems inherent in the No-Fault system and have repealed their no-fault laws. Of the 16 states that originally enacted No-fault laws in the early 1970s, seven have repealed them. Colorado repealed its No-Fault system in 2003. Florida's No-Fault system is set to sunset on October 1, 2007, unless lawmakers make changes to the system.
No-fault systems can function in several different ways:
- pure no-fault systems, where lawsuits are completely (or nearly completely) banned and replaced by universal compensation systems where payment is made irrespective of fault. Quebec has a plan of this nature.
- partial no-fault systems, where lawsuits are precluded in many cases but damages exceeding a certain threshold permit a lawsuit to occur. Ontario has a verbal threshold, where injuries over a certain description are actionable in tort. Manitoba has a monetary threshold, where income loss over a certain amount permits a lawsuit for the income loss over that amount (the balance being covered by the no-fault system).
- choice systems, where residents can choose to be insured by a no-fault system or a tort system, at their will. Saskatchewan was one of the first jurisdictions in the world to implement such a plan, which took effect January 1, 2003.
External links
- Saskatchewan Government Insurance, [http://www.sgi.sk.ca/sgi_internet/news_releases/2002/may_28_2002.htm Press Release - Choices in Auto Insurance.