Group Files No-Fault Initiative : Insurance: Drivers would collect from their own insurers regardless of blame. Second proposal by coalition would limit lawyers’ contingency fees.

Backers of last year’s abortive campaign for “pay-at-the-pump” auto insurance filed ballot initiatives Thursday to create the nation’s first “pure” no-fault auto insurance system in California and to limit contingency fees of plaintiffs’ lawyers.

Organizers said the no-fault proposal, in which motorists collect from their own insurers regardless of blame, is intended to reduce auto insurance rates by squeezing fraud and excessive legal and medical fees out of the system.

The other measure, they said, would encourage quick settlements of legal disputes. It would also allow consumers to keep more of the settlement money by capping their lawyers’ fees at 15% of an early settlement offer if a case does not go to trial.

The two initiatives, aimed for the March, 1996, election, are supported by a coalition that includes financial journalist Andrew Tobias, Silicon Valley software publisher Tom Proulx and Voter Revolt, the organization that sponsored Proposition 103, the 1988 insurance rate-cutting initiative.

But Harvey Rosenfield, who founded Voter Revolt and spearheaded the Proposition 103 campaign, denounced the two new initiatives as anti-consumer and accused their sponsors of cynically using the Voter Revolt name to imply that the measures have grass-roots support.

“Basically, the no-fault system would deprive even the most seriously injured people of the right to full compensation,” said Rosenfield, who is no longer connected with Voter Revolt. The fee-limiting measure will discourage lawyers from taking complex cases involving product liability or personal injury, he said.

The no-fault proposal would require all motorists to carry personal injury insurance to cover their own and their passengers’ medical expenses and lost wages resulting from any accident, regardless of who caused it. Organizers expect that most drivers would insure themselves for $1 million. But to make coverage affordable to lower-income drivers, motorists would be required to buy only $50,000 in coverage.

Since motorists would recover all costs from their own insurers, lawsuits against other drivers would be prohibited except when a driver was convicted of intentionally causing an accident or driving while drunk, while on drugs or while committing a felony. Therefore, it would be unnecessary for motorists to buy insurance to cover collisions with the uninsured, organizers said.

The proposal “would cut insurance premiums dramatically by cutting out the lawyers, cutting out the uninsured motorist subsidy and cutting out the incentive to submit phony claims,” Tobias said.

Tobias championed last year’s pay-at-the-pump proposal, under which motorists would have automatically received insurance coverage through an extra gasoline tax. That plan also contained no-fault provisions. He dropped it in the face of insurer opposition and consumer skepticism about its cost.

The California Trial Lawyers Assn., a traditional foe of no-fault, contested the money-saving claim. Association President Wayne McClean said studies have shown that no-fault “does not reduce premiums.”

Harry Snyder, co-director of the Consumers Union in the western states, said of the fee-limiting measure: “The way this was drafted means poor people get poor lawyers.” The 15% limit on plaintiffs’ lawyers “means that good lawyers will work for the defense,” where they are paid by the hour and not on contingency.

Gathering the signatures to place the questions on the ballot will begin early next year and will cost about $1.2 million, Proulx said. Depending on the level of opponents’ spending, the ensuing campaign could cost many millions.