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No-Fault Insurance Claims Cost Customers

Support for no-fault insurance has grown over the years, but it may not be the cheapest option for drivers seeking insurance. No-fault insurance coverage means that each driver is held financially responsible for their own medical expenses and damages done to their own vehicle.

Some proponents of the no-fault policy claim that it's a scam on the poor, saying that those who can afford insurance the least should be backed by an insurance policy that will benefit them most during an accident. They also claim that it drives up the cost to consumers and creates more types of fraud. Supporters of the no-fault system claim that this system is more cost effective and protects the rights of individuals more than other forms of insurance.

A recent finding, however, suggests that the no-fault system is putting a dent on consumer's wallets. A pole recently found that typical no-fault payment for medical care of accident victims rose 56% in 2009, with an average no-fault claim at $8,748.

Robert Harwig, New York Insurance Association's President, stated that the National Insurance Crime Bureau, the New York State Insurance Department and law enforcement agencies continue to see suspicious activities surrounding no-fault insurance system. He continues by adding that there are numerous loopholes in the no-fault system making it susceptible to what he describes as "fraud and abuse". New York has no-fault claims cost that is 111 times the U.S. national average of $4,152.

Lawmakers have implemented some requirements to decrease the burden on no-fault insurance claims. One such revision is that they limit one's ability to have unnecessary medical procedures done under the no-fault policy. This poses concerns for some, who wonder who will decide what is necessary and what is not.

Other requirements some lawmakers are considering include providing proof of necessary treatment. In this case, the injured would have to prove their medical procedure was necessary. Again, one worries about not being covered if someone else deems his or her procedure unnecessary. Laws are also becoming stiffer for those who are caught in insurance fraud, which should also cut down on the instances of fraud.

No-Fault vs. Tort System

Every state is different as far as how they handle insurance claims. Some use the no-fault system, while others use a tort system. Again, a no-fault system means that each individual is responsible for his own self, no matter who is found to be at fault for the accident. In a tort system, someone is found to be at fault, and that person is responsible for all parties of the accident.

Massachusetts uses a no-fault system, which also limits one's rights to sue under this system. In Massachusetts 20/40/5 is the basic coverage requirements for that state. This means that minimum Bodily Injury Liability is $20,000 per injured person, with a total of $40,000 per accident. Property Damage Liability coverage in the state of Massachusetts is $5,000.

Every state has different insurance minimum requirements that drivers must abide by. For example, in the state of Arizona a tort system is used, meaning someone must be found at fault to the accident and that person and their insurance company is held financially responsible for the accident. Arizona also has a basic minimum coverage of 15/30/10. This means that the state law minimally requires every driver to have Bodily Injury Liability of up to $15,000 per injured person, with a total of up to $30,000 per accident. The minimum Property Damage Liability coverage for the state of Arizona is $10,000.

It's best to know the minimum requirements for the state in which you drive and to know how that may affect what you have to pay out of pocket if in an accident. For example, if your state uses a tort system, you may be required to pay higher premiums, and your insurance company may have to pay more up front if you are found to be at fault for an accident. Claims like this can make your insurance go up. Compare online prices and don't be afraid to ask insurance companies for their best quotes, whether in person or online.

Other Types of Insurance Coverage

While having the minimum amount of car insurance as required by the state in which you drive is a must, it never hurts to have additional coverage. Depending on the state in which you drive, if your car is paid for, you may have the option of having liability insurance, which covers the expenses of the other driver in case of an accident. If this does not seem to be enough coverage, you may also consider additional coverage such as collision, comprehensive and uninsured/underinsured protection.

Collision insurance is just what it sounds like-coverage to your vehicle in case of a collision. It's a good idea and often a requirement to have both collision and comprehensive insurance if you're financing a vehicle, especially if it's a new vehicle. Comprehensive insurance coverage includes almost anything you could think of that might go wrong with your automobile, as long as it does not include collision. The coverage includes fire, theft, flood, hail, windstorm, and vandalism. Again, comprehensive insurance coverage is recommended if your car is worth more than $4,000 or is new.

Many new-car owners opt for full coverage on their vehicle. In this case, your car, and the car of the other vehicle are covered in case of an accident. This type of coverage is sometimes more than required by law depending on where you live. However, it can save you money in the long run if you are found to be at fault for an accident.

Save Money, Even Under No-Fault

No matter what system your state requires-no-fault or tort-you can save money on your car insurance by keeping a clean driving record. Keeping a clean driving record is a sure way to have the most affordable insurance policy available to you. Insurance companies want drivers who are responsible and show low-risk to cover. If you keep your record off their charts, you're bound to pay less for insurance.

Always remember to shop around for the best price, whether it is online, in person or by phone. Just because you've had the same plan for many years does not mean you have the best deal. In fact, it's important to know that many insurance companies offer new customers lower prices and incentives to join with them. If you've had the same insurance company for a while, chances are that you've lost your new-customer appeal, and you may be paying more for your insurance than you need to. Negotiate with your current provider on a lower price, and if they aren't willing to lower their price, there are plenty others who will.

If your driving record isn't the best, and you've had your insurance carrier for many years, you may want to consider taking a defensive driving course to lower your insurance price. Many insurance companies offer a discount to drivers to are responsible and show they are careful by taking defensive driving. Some colleges, universities or police stations offer defensive driving courses in most communities. You may call your local insurance company for details on what they will accept.


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