Decision ’96 : No-Fault Plan With Serious Faults : Prop. 200 embodies a worthy concept but defective execution
The concept of no-fault auto insurance makes sense: Medical expenses of an insured motorist who is injured are covered by his or her own policy, regardless of who caused the accident.
Consumer groups, insurance companies and this newspaper have endorsed the idea. But the last big effort to implement no-fault in California failed because the proposal was flawed. This year’s attempt, Proposition 200, the No-Fault Motor Vehicle Insurance Initiative, is flawed too. A thumbs-down to this Draconian measure.
Proposition 200 would mean more than creating a no-fault auto insurance system. It would refashion legal remedies available to victims of auto accidents. If passed, 200 will virtually eliminate the right to sue in vehicle accidents.
The big proponent of 200, the Alliance to Revitalize California, seems mostly, and openly, interested in putting lawyers out of business. Relinquishing the right to sue is too big a trade-off for the proposition’s faulty no-fault scheme. Insurance reform should be pursued by the Legislature, not by initiative.
Certainly auto insurance in California is overdue for reform. Other states have adopted no-fault in various forms and with varying success. Michigan’s is widely regarded to be the best. New York, where costs perhaps are most comparable to California, has had mixed results. But both states provide more consumer protection than the California initiative would.
Proposition 200 would radically change current laws regarding payments for injuries sustained in vehicle accidents. Motorists would buy insurance to cover their own economic losses--medical, rehabilitation and lost wages--up to policy limits. The mandatory “standard limits” policy would be $1 million, and there would be an option to buy more or less. The minimum would be a $50,000 policy, waiving the right to sue for any amount above that level. Laws regarding payment for property damage would remain unchanged.
The quid pro quo for this version of no-fault is a drastic curtailment of the right to sue for damages except in accidents involving a drunk driver or occurring during commission of a felony. That waiver is a potentially big price to pay for a $50,000 no-fault policy. Although auto accidents typically involve medical claims for less than that amount, there are those in which victims face catastrophic medical expenses and economic losses. Under Proposition 200, an insured accident victim who is incapacitated for life could receive no more than $1 million and could not seek further damages by going to court.
In Michigan, motorists have made a more sensible trade-off. Since 1973 they have given up their right to sue except in limited circumstances--serious injuries or death or drunk-driver-related accidents--in exchange for a no-fault policy of unlimited medical coverage. The reduction in lawsuits has been significant.
Proponents of 200 maintain that its passage would also reduce premiums. A Rand Corp. study estimated that rate reductions could be in the range of 11% to 29%. But that has not been the case in all no-fault states. And is the short-term saving worth giving up the long-term option of legal recourse in the event of a devastating accident?
Finally, Proposition 200 does nothing to create affordable insurance for uninsured motorists, who make up an estimated 28% of the state’s drivers. This proposition comes at the expense of greater consumer protection. Vote no on 200.
