Easing the Pain of Auto Accidents

The reason U.S. court dockets are chocked with auto-accident claims is traceable directly to the hoary rule of "fault"-the idea that a victim can collect only if he was not negligent and the defendant was. Because these issues are often hotly disputed, a deserving victim may have to haggle for years before getting his just award-and then he may have to share about one-third of it with his lawyer. The costly, complex process has been steadily boosting the price of auto insurance, but the amount paid out in accident awards remains far less than the 50-c- of each dollar that the insurance companies collect in premiums.

No Negotiations. The ideal solution to the problem, say Law Professors Robert Keeton of Harvard and Jeffrey O'Connell of Illinois, would be a system lor getting more money to victims while charging less for policies, and clearing most of the accident cases out of over worked courts. Like workmen's compensation insurance, the professors' "basic protection plan" permits recovery without proof of fault. As worked out in a new book, Basic Protection for the Traffic Victim (Little, Brown; $13.50), the plan requires every car owner to carry a policy that would pay all of a victim's out-of-pocket costs-up to $10,000. These costs would include hospital and medical bills as well as 90% of lost wages (on the theory that 100% payment would encourage malingering), and would be paid out as they actually occurred rather than in a lump sum after settlement. Regardless of who was at fault in an accident, the injured driver and his passengers would receive benefits immediately from the driver's own insurance company rather than the other driver's company. If both drivers were injured, they would deal directly with their own insurers and not have to await long negotiations.

All this would provide insurers with a far larger kitty from which to pay immediate benefits because 1) all drivers would contribute premiums, and 2) all damage suits involving less than $10,000 would be eliminated. Moreover, the plan would also outlaw claims based on pain or suffering unless they exceeded $5,000. The authors argue that it is impossible to assign such damages an accurate dollar value; getting rid of the smaller court claims would also cut administrative and legal costs for insurance companies and give them an opportunity to reduce premium prices. Some claimants, to be sure, might inflate their pain-and-suffering claims over $5,000. But if they did, they would (as now) have to prove both their suffering and the other fellow's fault.

Attractive Idea. Since out-of-pocket costs would be paid automatically, the only cases that would raise the fault issue and go to a jury would be the relatively few involving more than $10,000, or pain-and-suffering claims of more than $5,000. Actuarial studies are now under way to determine exactly how much money the plan would save both motorists and insurance companies. The idea seems so attractive that several states are studying possible adoption; in Michigan, the enabling legislation has already been introduced.

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