You be the judge . . .
Stan was making a legal left turn across a four-lane highway to enter a shopping center.
Barry, in the passing lane of oncoming traffic, was attempting to be considerate of Stan. He suddenly applied his brakes and waved at Stan to cross.
Gene was driving behind Barry and was in a hurry. Instead of slowing down, he swore confusedly and swerved around him. As a result of his action, Gene plowed into the side of Stan’s car, just as Stan was about to enter the shopping center.
Who is at fault?
In court, lawyers would apply different theories, but two of them: proximate cause and the reasonable man standard often come into play. A person is deemed to be the “proximate cause” if they make the last negligent act which contributes to an injury. To determine negligence, the courts would seek to determine if a person acted reasonable.
“The fault system of redressing civil grievances is as old as the country itself,” says Ralph Nader who co-authored Winning the Insurance Game. “From the beginning of our history, people have taken each other to court when they felt they had been wronged at the hands of another…When the automobile came into being and, by definition, automobile accidents followed, the legal system didn’t skip a beat as people sued each other for damages and injuries caused when great-grandpa’s Model A ran into his neighbor’s Model T.”
Traditional Tort Liability vs No-Fault
According to Wikipedia, most U.S. states have a traditional tort liability system for auto insurance, which means that the recovery of damages is determined by the principles of provable negligence.
Between 1970 and 1975, twenty-four states enacted some form of no-fault system for automobile insurance. The point of no-fault insurance is to lower premium costs by avoiding delay and expensive litigation over the causes of accidents while providing quick payments for injuries or loss of property. The victim’s insurance company only pays out the victim’s claim. The driver-at-fault’s insurance company would pay out their claim and also charge that party a higher insurance premium since they are now at higher risk.
While this may unnecessarily penalize the victim’s insurance company, the at-fault driver’s insurance company can recover the claims quicker through increased premiums. With an equal chance of drivers from each insurance company being at fault, the costs should even out in the long run.
Cons of the no-fault system:
- The system does not adequately punish reckless or negligent drivers. There are only raised premiums and higher risk ratings, not jury awards or legal settlements.
- Legitimate victims with resulting handicaps find it difficult to seek recovery.
- In the case of non-economic (pain-and-suffering) damages, most no-fault systems permit injured parties to seek compensation only in cases of “exceptional” injury.
- Some no-fault states have among the highest automobile insurance premiums in the country.
Pros of the no-fault system:
- Since accidents are inevitable, at-fault drivers should not necessarily be punished. The system needs more flexibility.
- The presence of liability insurance wrongly protects reckless or negligent drivers from financial disincentives of litigation.
- In regions with high numbers of uninsured motorists, at-fault parties are often unable to pay their liability damages.
Currently, twelve U.S. states and Puerto Rico require no-fault insurance. Colorado repealed its no-fault system in 2003, but passed a new no-fault law which took effect January 1, 2008. In three U.S. states – Kentucky, New Jersey and Pennsylvania – policyholders are permitted to choose between traditional cort and no-fault systems.
While determining who is at fault in an automobile accident, your insurance needs and laws are complex. Coverage varies wildly from company to company. As you can see, laws regarding who is at fault are vastly different from state to state. Your independent agent knows the laws and companies that provide coverage options.
Don’t try to handle your insurance without an agent you trust.