The costs of consumer choice for auto insurance in states without no-fault insurance
Traditional tort liability for personal injury from auto accidents has long been criticized on the grounds that its costs are too high and that any compensation it provides is inefficient, unfair, and dilatory. This article examines a reform system that replaces current no-fault proposals, focusing on the cost savings that would result. The new reform would give motorists the option of forgoing claims for noneconomic loss without forcing them to do so. Thus, motorists would be given the option of purchasing PIP (personal injury protection) coverage at the financial responsibility level required by state law for personal injury liability. The authors estimate the effect of the plan on the costs of personal, private passenger auto insurance in every state currently without a PIP plan limiting recovery for noneconomic losses. They estimate the percentage reductions in premiums for motorists choosing the new coverage and the anticipated dollar savings as well. They conclude that the merits of allowing motorists to opt out of payment for pain and suffering and other noneconomic loss, in return for lower costs and receipt of automatic payment for economic loss, are worthy of consideration in every state.