Any Auto Agents from a No-Fault State Care to Share???

[jmr30183]

I'm a Independent Agent (P&C) in Georgia. I had only heard the term "No-Fault" Auto Insurance and knew nothing about it until about six months ago. I met a new customer who had just moved to Georgia from Michigan, which is a "No-Fault State". As I explained how auto insurance works under Georgia law, it became increasingly obvious that she was very confused!

I provided her with much higher coverage limits and lower deductibles and still saved her $120/year compared to what she was paying in Michigan. I asked her to give me a few days to do some research and I would call her. I read every legitimate resource I could find on the subject of No-Fault and Michigan Insurance Law over the next few days and nights. I represent six different Personal Lines carriers, but one of them makes up 80+% of my business and they happen to be based in Lansing, Michigan. So I spent two hours on the phone with a Senior Underwriter learning all about the concept of No-Fault and how it is applied in Michigan, etc.

I called my new customer back to explain the differences between Michigan No-fault and Georgia 'Fault' (or would it be 'At Fault') systems of coverage. She was nearby, so she stopped by my office instead of trying to discuss and understand it over the phone. When I finished explaining it all, she asked why everyone (including Michigan) didn't operate the way we do in Georgia. She even made the comment that she had never known any system but No-Fault until then, but suddenly it seemed totally illogical to her...

I've tried to continue learning about other No-Fault states and the overall concept itself. From my viewpoint, it appears to be similar to Communism in several important ways. As an ideal, it makes sense and in a perfect world it might work perfectly. But when you introduce humans and reality to the mix, the ideal fails miserably. Unfortunately, it fails to accomplish the goals or solve the problems that it was created to fix.

I would be very interested to hear from any agents who sell auto insurance in a No-Fault state. Do you think that No-Fault is inherently flawed, ineffective and costly? Or do you have a different opinion? Do you think it has a place in the future or will it eventually fade completely away?

Twenty-four states enacted No-Fault laws between 1970 and 1975. At present, only twelve states still operate under No-Fault or some modified form of the No-Fault concept. It doesn't take a a genius to see in which direction things are heading....

Any agents who operate in a No-Fault state are especially encouraged to share your opinions and experience.

Peace...

 

[Chazm]

I live in FL which is a no fault state. What does that mean? Seriously, I don't know exactly how it works

 

[jmr30183]

I live in FL which is a no fault state. What does that mean? Seriously, I don't know exactly how it works

The No-Fault system requires a driver’s own insurer pay for any injuries and/or compensable expenses up to the policy limit, regardless of who caused the accident. Non-monetary damages (pain-and-suffering) are not compensable under most no-fault schemes. Since each driver’s own policy covers his/her injuries and expenses, you can’t sue other drivers even if they were at-fault! Worst of all, if a driver’s injuries exceed the coverage limit he has purchased, a not-at-fault driver could end up with massive medical debt that he is responsible for paying, not the person whose negligence caused his injuries!

Property Damage is still based on fault even in No-Fault states. So the person who caused the accident has to pay to fix your vehicle, but not to fix your broken bones or worse.

The (fuzzy) logic behind the No-Fault concept is that it would reduce the need for costly litigation to determine fault. Fewer costly lawsuits would translate into lower insurance premiums. It’s so simple and logical that it ought to work….in a utopia. But when you factor humans into the equation, that’s when it all falls apart!

Fraud is rampant in no-fault systems. Combined with rapidly rising medical costs, no-fault states actually have higher insurance premiums, on average, than states operating in more traditional ways.

According to the state’s Office of the Insurance Consumer Advocate, Floridians pay an extra $1-billion per year due to fraud-inflated premiums for personal injury protection!

I was very surprised to learn that my own state, Georgia, was a no-fault state until 1991 when they repealed the law. Liability premiums immediately dropped 20% and stayed down.

In my opinion, it should be determined which person(s) are at-fault in an accident and they should be held financially accountable for their negligence. Their insurance premiums should also increase to reflect the greater risk they represent. Why make it more complicated when it’s pretty cut-and-dry?

 

[Philly]

Also is MI we have unlimited medical which cause the rates to be higher.