5 problems with the auto insurance industry?

1. High frequency of accidents.

2. High cost of accidents.

3. Large underwriting losses.

4. Irresponsible drivers.

5. Availability and affordability of insurance.

What are the 7 various approaches to compensate auto accident victims?

TUUF LUC

1. Tort liability.

2. Financial Responsibility laws

3. Compulsory Insurance laws

4. Unsatisfied judgement funds.

5. Uninsured motorists coverage.

6. Underinsured motorist coverage

7. Low-cost auto insurance

Difference between contributory negligence law and comparative negligence law is.

Contributory law says if you are at fault by any percentage, you collect no damages.

Comparative - each party shares in loss based on percentage at fault.

Four criticisms of financial responsibility laws are:

1. Most are only affective after an accident, so what if the negligent driver has no insurance?

2. Victims are not guaranteed payment; e.g. hit&run.

3. Long-delays in legal system, so compensation is slowly received.  e.g. court backlog.

4. Cost of injuries may exceed State's minimum required coverage.

1.Victims are not guaranteed payment; e.g. hit&run

2. Victim's losses may exceed State minimum coverage.

3. Delay in legal system.  compensation is slow.

Which criticisms are unique to compulsory insurance laws?

1. The laws don't reduce the number of uninsured motorists; e.g. lapsed coverage or cancelled coverage.

2. Insurers argue that freedom to select profitable insureds is hampered.

3. Consumers argue safe drivers subsidize reckless drivers since insurers must take them.

4. The laws don't reduce the number of accidents.

Four characteristics of Unsatisfied Judgements Fund are?

Injured MUST get a judgement.

Maximum amount paid usually = the State's recommended minimum.

Negligent driver is not relieved of liability when fund makes payment on their behalf.

Drivers must repay the fund.

Four CRITICISMS of unsatisfied judgements fund are?

1. Financing is not equitable since all drivers pay a fee.

2. Fund administration is cumbersome.

3. Funds is seldom paid back.

4. Some funds are not financially stable.

Tort liability system has three main characteristics, which are.......

Based on fault or negligence.

Traditionally used to compensate injured auto accident victims.

Negligent driver has legal liability for damage to property or bodily injury to injured victim.

What is contributory negligence?

Comparative negligence?

If person contributes in any way to their resulting injuring, they can not recover damages.

If both the injured person and other driver are negligent, they share the financial burden according to their degree of fault.

Must be included in the policy.

Must purchase increased limits that are higher than the state's minimum limits.

Coverage must apply to all autos covered under the policy.

Pros (1) and Cons (2) of Tort liability system.

Pros: Any operator can be held liable for their negligence.

Cons: 1 Accident victim must prove another driver was negligent before collecting damages.  2. Negligent party may not have insurance or resources to pay the damages.

Pros: All motorists are required by law, to have insurance.

Cons: 1. Do not stop hit-and-run drivers, uninsured motorists or insufficient coverage.  2. Delays in compensation.  3. Do nothing to reduce the number of accidents.

Medical

Rehab (medical)

Loss of earnings, time limit and $ capped.

Expenses for essential services, e.g. housework.

Funeral

Survivors' loss benefits, periodic payments to compensate survivors

Add-on plans, benefits to victims regardless of fault but allows injured party to get damages from negligent party.

Modified, prevent injured from getting damages from negligent driver unless claim exceeds monetary or verbal (disfigurment) threshold.

Choice, Option to purchase no-fault.

Could eliminate fault finding.

Could eliminate inequities in claim payments.

Could correct limited scope of current system.

Could decrease portion of premium dollars paying for claim investigations and legal costs.

Could prevent delays in payment

1Defects in tort system are exaggerated.

2Stories of lower premiums and improved efficiency are  overstated and unreliable.

3Could penalize safe drivers.

4No fault benefits do not include pain & suffering.

T5ort system only needed to be reformed, not replaced.

How is the injured's right to sue under no-fault;

Pure no-fault

Add-on

Modified

Choice

Pure-insured could never sue; their insurer pays all.

Add-on, certain benefits paid regardless of fault, but injured retains their right to sue.

Modified, can sue when claim > monetary or verbal threshold.  IF < the threshold, your insuer pays.

Choice, rights to tort recovery are limited.  Rights to sue are limited, too.

1. Applicants must show inability to get insurance elsewhere x # of days beforehand.

2. Mimimum limits => State's minimum.

3. Certain persons are ineligible (criminals).

4. Premiums usually > standard market.

1Sets rates.

2Approves policy forms.

3Designates insurers to service high-risk business.

4All insurers in state assessed proportionate share of JUA's losses and expenses based on their percentage of voluntary (non JUA) written premium.

1.Higher premiums.

2.Limits at least = state's miniums.

3.may limit medical payments.

4. May have high deductibles on collision.

Seven Primary rating factors are:

MAS E TU Good

Marital status.

Age.

Sex

Eductation credit

Territory

Use of auto

Good student

FIVE other rating factors for determining auto premium are:

DR Type L N

Deductibles

Record, driving

Type of vehicle

Liability limits

Number of vehicles