No-Fault Sweepstakes | SR22 Auto Insurance

No-Fault Auto Insurance – What’s it All About?

During its first year of life, Massachusetts no-fault auto insurance radically changed automobile insurance in that state. To no one’s surprise, the first year produced an avalanche of statements and counter statements about no-fault’s success and failure. Find low cost sr22 auto insurance quotes.

Because the partisans of no-fault had gone to such extremes to sell the program and because they were so wholly committed to its enactment, obvious shortcomings were swept under the rug. No-fault was shielded from criticism by its friends, but even some of its most ardent supporters now conceded the need for better performance.

Most of those who had opposed enactment of no-fault believed that, although court congestion (one of the reasons for the new bill) is undesirable, also undesirable are drastic reductions in benefits to innocent victims, removing the right to sue, and paying those who cause accidents. Such objections were based on philosophical ideas about what a socially responsible automobile insurance plan should be. Now, however, that a no-fault plan had been put into effect, the critics could examine whether it was actually achieving its goals.

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No-fault proponents had criticized the fault system, saying it was an ineffective and inefficient means of distributing benefits, but they could never sell that argument. What they could sell was a reduction in cost to the insurance-buyer. In Massachusetts, the proponents of no-fault clearly built in a 15 per cent automatic cost reduction in compulsory personal injury coverage as part of the initial inducement for the Legislature to accept the no-fault package. Get sr22 auto insurance quotes now.

The insurance companies rushed to pick up the ball and implied in their advertising that no-fault would result in a 15 per cent reduction in all related lines of insurance, such as property damage, collision, and comprehensive and medical payment. During the legislative debate, the 15 per cent reduction was in fact expanded to these types of automobile coverage, at which point the insurance companies threatened to leave Massachusetts. They unpacked their bags only after the Massachusetts Supreme Court abrogated the wholesale reduction and returned to the 15 per cent cut on compulsory personal injury coverage.

The 15 per cent reduction applies to only about one- fourth of the total automobile insurance bill. The public, led to believe it would pay 15 per cent less on total automobile coverage, now found its savings reduced. Furthermore, it was never adequately informed that, along with the cut, most of the benefits previously available under the fault system would be greatly reduced.

In 1970, approximately $622 million of combined automobile insurance premiums was collected by the companies writing in Massachusetts. Of this total, $153 million was collected for compulsory personal injury coverage—about one- fourth of the total income of the companies. The 15 per cent reduction was applied to this one-quarter. While the 15 per insurance agents and brokers wanting to abandon fault for no-fault; there was no ideological commitment to no-fault, only the prospect of increased commissions.

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