Florida lawmakers recently allowed the state’s no-fault auto insurance law to lapse. No-fault auto insurance, which was intended to keep a reign on auto insurance costs, had resulted in Florida consumers paying the sixth highest rates in the nation for coverage.
At least one commentator besides myself thinks that this is a good thing.
The virtue and vice of a no-fault auto insurance system is that it eliminates the need and the incentive for lawyers to get involved in representing injured people in claims against insurers. In theory, no-fault coverage is supposed to provide compensation for medical expenses for “less serious” injuries, while leaving the courts open for people who have more significant injuries. In return for giving up their right to the courts (not voluntarily, by the way), consumers were supposed to recive automatic payment of their medical expenses.
The main problem with no-fault insurance systems is that it leaves consumers largely defenseless against insurers when legitimate claims for medical expenses are denied or delayed. The only option for consumers is to hire lawyers on an hourly basis. Many do not have the resources to do so, and when they do, it often does not make economic sense. The net result: fat insurance profits at the expense of paying consumers. That is what is wrong with no-fault ins urance systems.