Research Brief
Choosing an Alternative to Tort
Jan 1, 1995
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This study estimates the effects of a broad range of alternative no-fault auto insurance plans, compared with the traditional tort system. A simulation model relating accident victims' injuries and losses to their expected auto insurance compensation under a specified no-fault plan is applied to a representative sample of auto accident victims in the tort states. Their estimated compensation under each of several no-fault alternatives is then compared to their actual compensation. The results indicated that no-fault can yield substantial savings over the traditional system, or may increase costs substantially, depending on the no-fault plan's provisions. Regardless of plan provisions, all no-fault plans reduce transaction costs, match compensation more closely with economic loss, reduce the amounts paid in compensation for noneconomic loss to less seriously injured people, and speed up compensation.
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Originally published in: Journal of Risk and Insurance, v. 60, no. 2, 1993, pp. 265-287.
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