Auto Insurance: Relief for the Uphill Battle
A NEW, simplified approach to auto insurance was unveiled last June in Nevada, and the enthusiastic response from consumers and insurers suggests that an answer to a broken auto insurance system may be at hand. The approach, called Consumer Choice auto insurance, has the potential to lower premiums for basic coverage and provide a more efficient, comprehensible auto insurance system.
Real benefits are offered to consumers through market forces and free choices, rather than illusory gains based on unworkable rate rollbacks.
Consumer Choice auto insurance would give each motorist the choice between the current high-cost tort system (Nevada has fifth highest rates in the country), or the Personal Protection Policy.
This low-cost alternative would allow motorists to make auto insurance coverage decisions based on the needs and financial situation of their families - the same way they make decisions about food, clothes, and housing.
A motorist would no longer be forced by the state to buy an arbitrary level of auto insurance coverage designed to protect some unknown person with whom he might someday be involved in an accident.
One of the beauties of the Personal Protection Policy is that, in the event of an accident, a motorist knows exactly where he stands. Medical and car repair bills are paid immediately. The driver doesn't have to worry about whether he can prove that the other motorist was at fault, has adequate insurance, or has insurance at all.
Yet one small, politically influential group in Nevada plans to fight Consumer Choice auto insurance to the death - the lawyers who make their living by arguing over who is at fault. For the last few decades, these lawyers have sabotaged or crippled most consumer efforts to enact real no-fault insurance.
The problem they have with Consumer Choice is that it deprives them of their argument against no-fault insurance - that it is wrong for the state to take away any citizen's right to sue.
With Consumer Choice auto insurance, nobody's right to sue is taken away. Any motorist who wants to stick with the tort system - knowing that it is going to cost him extra to gamble on the long-shot that Donald Trump will hit him and be at fault - is welcome to do so.
But Consumer Choice also gives the individual the right to freely enter into a pact with the state that will limit his right to sue or be sued as a result of an auto accident, except under limited circumstances. This new system cuts hundreds of millions of dollars of cost out of the price of automobile insurance - a cost that results from abuse of the legal system.
Consumer Choice gives motorists - who are often willing and eager to relinquish the right to sue - a more affordable auto insurance policy that pays the bills promptly. It also gives them the fundamental right consumers have to choose freely.
The best argument the hard-pressed trial bar was able to muster against this approach was that the average person is not smart enough to understand the tradeoff.
But a statewide poll conducted by the polling unit from the University of Nevada shows that 79 percent answered ``yes'' to the question: ``Would you favor a new personal protection policy that greatly limited the possibility of suing and being sued, if it would save you at least 20 percent of your auto insurance bill?''
And when the Las Vegas Sun's inquiring photographer asked six motorists the same question, the Consumer Choice approach was embraced by all six.
Against that backdrop, the Nevada Consumer Choice in Motor Vehicle Insurance Act unanimously swept through the Senate Commerce Committee. But in a bizarre turn, the legislation became caught up in an unrelated political squabble and never made it to a floor vote. Then, in an even-more-regrettable effort to appease angry voters, the Nevada Legislature hastily adopted a clone of California's Proposition 103 mandating an arbitrary auto insurance premium rollback.
But you can't fool all of the voters all of the time. When it comes to the mischievous foolery involved in arbitrary rollbacks, the clock is running.
It is worth noting that nine months after California voters were persuaded to support the Proposition 103 palliative, not a single penny in auto insurance savings has been realized.
A force was unleashed in Nevada that can not be denied. The Consumer Choice approach to auto insurance makes personal protection fair, responsive, easy to understand, and can provide a real solution to a real problem.
In the months ahead, the Consumer Choice approach is certain to be heard again in other states.