No-Fault Versus Tort-Liability Compensation for Automobile Accidents: Which is Best?
No-fault automobile insurance is a first-part coverage under which accident victims can recover up to certain limits for economic losses from their own insurers without regard to fault. On the other hand, a tort-liability compensation system is based on third-part coverage under which negligence has to be proven in order to collect from the party at fault. Problems with and criticisms of the tort-liability compensation system in automobile insurance culminated in the implementation of no-fault plans in 24 states during the 1970's. This paper presents empirical tests of some of these alleged advantages, based on loss-ratio data by state for 1975 through 1980. It was found that a no-fault compensation system tends to increase relative benefits provided to consumers of automobile insurance. However, it was also found that a no-fault system does not improve the predictability of losses for insurers, at least in the short run.
Year of publication: |
1985
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Authors: | Urrutia, Jorge ; Witt, Robert C. |
Published in: |
Journal of Insurance Issues. - Western Risk and Insurance Association. - Vol. 8.1985, 1, p. 52-71
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Publisher: |
Western Risk and Insurance Association |
Saved in:
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