Purchase Print Copy

 FormatList Price
Add to Cart Paperback47 pages Free

This article summarizes an analysis of how a plan that offers a choice between tort and absolute no-fault personal injury insurance would affect the costs of auto insurance in states that now have the traditional tort system. The authors estimate that the cost of compensating people on behalf of drivers who elect no-fault will be about 60 to 65 percent less than what they would have been if those drivers had been insured under the traditional tort system. These savings include both the compensation paid to accident victims from all forms of auto insurance and all transaction costs incurred in making such payments. Assuming that the savings are passed in full to consumers, these insurer savings translate into lower premiums for motorists. Those who had only the mandatory coverage under tort save the most — about half of their former premium under tort. Those who had fuller coverage — e.g., including collision/comprehensive — save about 30 percent. Premiums are unchanged for motorists who choose to remain in the traditional tort system. Nationwide, motorists would save anywhere from $5-15 billion, depending on the percentage of individuals who switch from tort to no-fault.

Originally published in: Maryland Law Review, v. 52, no. 4, 1993, pp. 1016-1062.

This report is part of the RAND Corporation Reprint series. The Reprint was a product of the RAND Corporation from 1992 to 2011 that represented previously published journal articles, book chapters, and reports with the permission of the publisher. RAND reprints were formally reviewed in accordance with the publisher's editorial policy and compliant with RAND's rigorous quality assurance standards for quality and objectivity. For select current RAND journal articles, see External Publications.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit www.rand.org/about/research-integrity.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.