Auto No-Fault

Question 1

Architecture of No-Fault Plans

Answer 1

• shares same 4 key features as workers’ comp
• typically abolishes tort for claims below a specified dollar amount (would recover for economic loss w/o regard to comp) but preserves tort claims for above (would need to show negligence, but can recover pain and suffering)

Question 2

Problems w/ Tort + Liability Insurance System

Answer 2

• expensive to administer (out of a dollar spent on auto-insurance, 44 cents paid out as injury comp)
• protracted + time-consuming
• tendency to overcompensate small claims (nuisance value - cheaper for insurance companies to settle them out for a little more than economic losses) but UNDERCOMPENSATE severe injuries (costly, time-consuming, delays that can interfere w/ rehab -> pressure on people to settle for less than what they actually deserve)
• difficult to attribute fault + there’s an element of luck (some are negligent and just never encounter trouble)

Question 3

Benefits of Auto No-Fault

Answer 3

• speedier determination of claims (especially “lesser injuries”)
• more compensation b/c no showing of fault required
• save on tertiary costs (don’t need individual adjudication for pain and suffering on smaller claims, nor comparative fault)
• no-fault will lead to cheaper insurance package

Question 4

Core Arguments Against No-Fault

Answer 4

• fault advocate would claim does not have deterrence pressure of tort regime
• choice advocate - would ask why make it compulsory

Question 5

Auto No-Fault and Deterrence

Answer 5

• difficulty in maintaining the deterrent effect
• but, could maintain the third-party insurance rating (how you impact others) - under no-fault plan, you’re buying insurance to protect yourself, but theoretically merit-ratings could be calculated to reflect how you impact other people -> would allow for deterrent pressure
• could also argue there are plenty of other pressures (ex traffic laws + those who enforce them) that incentivize good driving

Question 6

Why have the compulsory aspect of no-fault?

Answer 6

• fairness rationale - driving is a common activity that benefits all but harm to some will occur by chance due to characteristic risks -> concept that burden of societally beneficial activity that we all engage in should be born by society as a whole

Question 7

New Zealand

Answer 7

• omnibus no-fault plan
• pays economic harm of medical bills and lost wages up to a point, but avoids individual pain and suffering
• covers accidents in employment situations, in non-employment situations, and highway accidents

Question 8

New Zealand - No-Fault Plan Rationale

Answer 8

• fairness - notion that we all benefit from social life + common activities -> we are all beneficiaries + should bear the burden equally