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No-Fault Auto Insurance In the early 1930s a group of academics examining the nations auto insurance system suggested an alternative approach based on the workers compensation system developed earlier in the century Their goal was to achieve rapid and full compensation of auto accident claims without litigation They suggested that we steer away from the American tradition of resolving disputes through litigation to a system in which the insured insurance company pays the claim This proposal won little attention until professors Robert Keeton and Jeffrey OConnell refined it in 1965 They proposed a limited no-fault system exclusively for minor accidents Anyone injured in an accident would receive compensation for medical bills loss wages regardless of fault Only those meeting the threshold of 5000 would have access to the tort system At first this no-fault system seemed like an efficient way to receive compensation for accidents and many states jumped on the bandwagon At its peak 24 states adopted some form of no-fault Currently there are 10 mandatory no-fault states In the following paper Im going to address some possible reason why many states have back away from the no-fault system No-fault states have the highest average automobile liability insurance premiums Of the ten states with the highest premiums in 1989 eight were no-fault Since then PA NJ and CT have repealed their mandatory systems however no-fault remains optional in PA and NJ From 1989-1995 premiums for no-fault states rose nearly 25 greater than in non no-fault states Under the no-fault system both the innocent and the guilty are compensated with medical wage loss and other benefits- regardless of whom is at fault I would say that paying the claims of both parties in more expensive than paying just for the innocent The no-fault system does not reward good drivers but gives bad drivers the benefit If we were under the tort system maybe drivers would be more careful because if it were there
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