No-fault insurance has the goal of lowering premium costs by avoiding expensive litigation over the causes of accidents, while providing quick payments for injuries. The victim's insurance company would only pay out the claim, while the driver-at-fault's insurance company would pay out a claim and charge that party a higher insurance premium as they are now higher risk. While this may disadvantage the victim's insurance company, as the at-fault driver's insurance company can recoup the claims quicker through raised premiums, accidents happen between drivers of both insurance companies with an equal chance of drivers from both sides being at fault, so this in theory should even out
Critics of no-fault argue that it does not punish reckless or negligent drivers sufficiently, with only raised premiums and a higher risk rating, and no jury awards or legal settlements. Detractors of no-fault also point out that legitimate victims with subtle handicaps find it difficult to seek recovery under no-fault. In response, proponents of no-fault insurance point out that automobile accidents are inevitable and that at-fault drivers therefore should not necessarily be punished; moreover, they note that the presence of liability insurance insulates reckless or negligent drivers from financial disincentives of litigation. Also supporting no-fault insurance, in regions with high numbers of uninsured motorists, at-fault parties are often “judgment proof” (i.e., unable to pay their liability damages) in any case. Another criticism is that some no-fault jurisdictions have among the highest automobile-insurance premiums in the country, but this may be more a matter of effect than cause (i.e., the financial savings from no-fault may simply make it more popular in areas with higher automobile-accident risk).
A quantitative monetary threshold that sets a specific dollar (or other currency) amount that must be spent on medical bills before a tort is allowed. Disadvantages of this threshold are: (1) that it can encourage insureds (and their medical providers) to exaggerate medical costs through over-utilization, and (2) that, unless indexed, it can become ineffective over time because of inflationary effects on medical costs.
A qualitative verbal threshold that states what categories of injuries are considered sufficiently serious to permit a tort (e.g., death, or permanent disability or disfigurement). The advantage of the verbal threshold is that it removes any incentive to inflate damage amounts artificially to meet some preset monetary loss figure. The primary disadvantage is that broad interpretation by the courts of the threshold can lead to over-compensation.
Critics of no-fault argue that it does not punish reckless or negligent drivers sufficiently, with only raised premiums and a higher risk rating, and no jury awards or legal settlements. Detractors of no-fault also point out that legitimate victims with subtle handicaps find it difficult to seek recovery under no-fault. In response, proponents of no-fault insurance point out that automobile accidents are inevitable and that at-fault drivers therefore should not necessarily be punished; moreover, they note that the presence of liability insurance insulates reckless or negligent drivers from financial disincentives of litigation. Also supporting no-fault insurance, in regions with high numbers of uninsured motorists, at-fault parties are often “judgment proof” (i.e., unable to pay their liability damages) in any case. Another criticism is that some no-fault jurisdictions have among the highest automobile-insurance premiums in the country, but this may be more a matter of effect than cause (i.e., the financial savings from no-fault may simply make it more popular in areas with higher automobile-accident risk).
A quantitative monetary threshold that sets a specific dollar (or other currency) amount that must be spent on medical bills before a tort is allowed. Disadvantages of this threshold are: (1) that it can encourage insureds (and their medical providers) to exaggerate medical costs through over-utilization, and (2) that, unless indexed, it can become ineffective over time because of inflationary effects on medical costs.
A qualitative verbal threshold that states what categories of injuries are considered sufficiently serious to permit a tort (e.g., death, or permanent disability or disfigurement). The advantage of the verbal threshold is that it removes any incentive to inflate damage amounts artificially to meet some preset monetary loss figure. The primary disadvantage is that broad interpretation by the courts of the threshold can lead to over-compensation.
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