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No Fault and Tort Car Insurance

The regulation of the automobile insurance industry in the United States primarily rests at the state level, although recent federal legislative developments may somewhat affect the full extent of the states' sovereignty in this area of self-governance in years to come. Each state has the right and the responsibility to determine for itself what kind of auto insurance system to set up. There are two basic forms, each of which does have some variants within itself. The majority of U.S. states are tort states, with the remnant utilizing some version of no fault auto insurance law in their regulation of the auto insurance industry and of drivers on state roads.

No Fault Insurance Basics

No fault auto insurance law is perhaps the more misunderstood of the two forms state have to choose from in framing their auto insurance industry regulations and their rules for policy holders within their state boundaries. There is a popular misconception among many drivers even in no fault states, which says that no fault law means no one gets blamed for a car accident. People who espouse this sort of belief think that no fault is superior to tort law because if no one gets assigned blame, then no one's insurance rates need increase in the wake of an auto collision.

It is true that in certain no fault states, there are legal provisions on the books protecting drivers from having their rates increased if they are involved in accidents for which they were not at fault. But this is not a hard and fast rule spanning all no fault law, and it is certainly not true that there is no interest in this sort of system with the assignment of blame. A more accurate depiction of no fault auto insurance law in light of its interest or lack thereof in the assessment of fault is that it is not the top priority of states espousing such laws.

The name "no fault" really suggests to a lot of non-experts that such laws ignore fault or negligence altogether, but in reality they only make fault somewhat secondary in importance. The original purpose for no fault law when it was first instituted was to cut down on the amount of time it took insurance providers to get funds to victims of accidents to help them defray the costs of medical expenses. One drawback some lawmakers felt was inherent in tort law was the fact that its preoccupation with fault tended to hinder victims' ability to get necessary medical care in the immediate aftermath of a collision.

Purpose of No Fault Law

The real purpose, then, of no fault law, and the real meaning behind its somewhat mysterious title, is to provide for the expenses of medical care for people who have been injured in car accidents. In a lot of cases, the assessment of negligence can drag out over the course of several months-or longer when cases end up in court-due to the sometimes complex nature both of auto accidents themselves and of the legal process for negotiating the assignment of fault. It is hard to get funds for needed medical treatment when a case is tied up in litigation and insurers are preoccupied with the details of assigning fault for an accident. The principal reason no fault law came into existence was the desire among lawmakers to enable car accident victims to get treatment they needed after accidents regardless of fault, while insurers did their job of assessing blame.

As a result of this desire on the part of lawmakers in no fault states, auto insurance providers doing business in these states have a legal responsibility to provide certain coverage for necessary medical care associated with injuries suffered by their clients in auto accidents. This responsibility exists outside of any concern for assigning blame or liability in each case, though it does not eliminate that concern. No fault states are not states in which there is no emphasis on liability; in fact, auto liability coverage is still required in all the no fault auto insurance states. It just puts more importance on getting all victims the care they need, while insurers work on their clients' behalf to thoroughly assess the accident to accurately assign blame.

Tort Different from No Fault

Although the no fault system for auto insurance law gained popularity in the early years since its introduction in the 1970s, it has shown its share of problems. Partially for this reason, there are only a dozen no fault states today, with the rest of them using some form of tort law. Tort auto insurance law is a fault-based system of coverage. In tort law, the driver who is at fault for an accident is responsible for paying the cost of the victim's medical expenses and other costs associated with the crash. The definition of tort law necessitates a speedy response from insurance adjusters and law enforcement officials, who often work together to assess fault in an accident situation.

Full tort auto insurance gives the insured the right to sue for damages outside the immediate financial cost directly associated with the accident. Specifically, pain and suffering damages can be sought by policy holders in tort states who are covered by full tort auto insurance. But full tort is not the only version of tort auto insurance. Another option is available for policy holders in certain tort states.

Limited tort auto insurance is a coverage option devised to hold down the cost of coverage. One perceived drawback of full tort auto coverage is that it seems to necessitate large premiums for insurers to provide this sort of coverage. Limited tort attempts to address this cost factor, but does so with a trade-off that policy holders have to swallow if they want to take advantage of these reduced rates.

In a limited tort auto insurance arrangement, the policy holder waives his or her right to sue for damages exceeding the actual cost of the accident. In other words, if you are covered with a limited tort policy, you cannot pursue compensation for pain and suffering in the wake of a collision. You can still receive payments for medical care and those sorts of costs, but your right to sue for pain and suffering is extremely limited. It is not completely shut off, however; there are exceptions built in to limited tort law that allows policy holders to pursue pain and suffering compensation. Each limited tort state varies, but generally speaking, cases involving death, permanent disfigurement or injuries significantly affecting bodily function allow policy holders to seek pain and suffering compensation even in limited tort cases.

Clearly, no fault and tort auto insurance law differ greatly in the way they set up the specifics of insurers' and policy holders' rights and responsibilities regarding both groups' response in the aftermath of a car accident. However, even with these differences both seek in their own way to protect policy holders and to regulate auto insurance law to try to make it operate in a more effective and efficient manner. The real-world application of both no fault and tort car insurance systems reveals limits and imperfections in both auto insurance systems.



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