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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.

Originally published in: Journal of Risk and Insurance, v. 60, no. 2, 1993, pp. 265-287.

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