Politics at Fault
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It might seem impossible for anyone to devise an auto-insurance plan more fouled up than the one now actually in effect in the U.S. Under the present system, drivers pay high premiums, insurers incur heavy losses, and the nation’s accident victims recover only about a fifth of the $5.1 billion a year in medical expenses, loss of income and other tangible damage that they suffer. Massachusetts politicians, however, have almost succeeded in producing something even worse. They have taken a highly promising plan for reform and turned it into a hash that, unless quickly amended, could prevent many Bay State drivers from being able to buy insurance at any price. The original plan, carefully drawn by Governor Francis W. Sargent in consultation with insurance-industry leaders, would have provided the first clear-cut test in any state of the “no-fault” principle of auto insurance. At present, a person injured in an auto crash must prove that the accident was someone else’s fault before he can collect any insurance award. Many accident victims—35% in Massachusetts—are unable to prove fault and never get a penny; others overload the courts and the insurers’ investigative machinery with claims that take up to four years to settle. Sargent proposed instead that an auto driver, his passengers and any pedestrians struck by the car be entitled to collect up to $2,000 for accident injuries from the driver’s insurance company without attempting to prove who was at fault. The bill also ordered a 15% cut in premiums on bodily injury insurance. The companies figured that they could afford the lower rates because of prospective slashes in their investigative, administrative and legal expenses. Massachusetts drivers could use the reduction; they pay the highest average premiums in the country. The minimum liability insurance required by law in Massachusetts costs $128.37 v. a national average of $89. More : time.com |