As collision repairers we find ourselves ever more involved in the legal aspects surrounding the repair of vehicles. One concern is insurers' efforts regarding national no-fault insurance legislation. In order to see how this will adversely affect consumers and your business, you'll need to have a basic understanding of the following legal terms: tort, tort reform and no-fault insurance. So, bear with me here!

In layman’s terms 

 According to Black’s Law Dictionary, a tort, in the most basic understanding of the term, is a civil wrong for which a remedy, such as the means of enforcing a right or preventing or redressing a wrong legally or equitably, may be obtained. This is usually in the form of damages, such as money claimed by or payment ordered to a person as compensation for loss or injury.

 Tort reform, in its basic form, is defined by Black’s as a movement to reduce the amount of tort litigation, usually involving legislation that restricts tort remedies, or that caps awards damages, especially for punitive damages.

 Black’s further qualifies tort reform as it relates to the business of insurance. “Advocates of tort reform argue that it lowers insurance and healthcare costs and prevents windfalls. Opponents contend that it denies plaintiffs the recovery they deserve for their injuries.” The last part of the explanation, as it relates to the business of insurance, should give us a strong hint at how tort reform will impact you, your business, and the consumers whose vehicles you would like to have a shot at repairing.

 According to Black’s, no-fault insurance is defined as, “an agreement to indemnify for a loss due to personal injury or property damage arising from the use of an automobile, regardless of who caused the accident.”

Discussion of no-fault insurance on a state-by-state basis

 Efforts to promote no-fault insurance on a state-by-state level are nothing new.  According to www.infoplease.com, there are currently only 13 states with no-fault auto insurance laws that in some way restrict the right of parties to file legal suits. No-fault insurance (which made its debut in 1947 in Canada and migrated to the US in 1971,) is a type of indemnity plan, usually applied to automobile coverage. It follows that those injured in an accident receive direct payment from the company with which they themselves are insured. Basically, no-fault insurance eliminates the need for accident victims to establish another’s liability, or fault, through a civil lawsuit.

 Understandably, lawyer groups oppose no-fault, contending it limits the citizen’s right to sue. Supporters say that it leads to quicker settlement of accident claims and lower premium rates than the traditional tort liability system because it reduces legal fees and court costs. The website of insurance.com adds, in part, “In most states, auto insurance functions under a traditional fault-based system (under which) insurance companies make payments based on each person’s degree of fault in an accident.”

 However, long and costly court battles may be required to determine who was at fault in many accidents. In an attempt to reduce this problem, thirteen states (CO, FL, HI, KS, KY, MA, MI, MN, NJ, NY, ND, PA, and UT) have adopted an alternative no-fault system of insurance.

 Under a no-fault system, when you have an accident, your auto insurance provider automatically pays for your damages, regardless of fault, up to a specified limit. In exchange for this guaranteed payment, you must forego some of your rights to sue the other driver involved in the accident. By the same token, you are also protected from being sued in the event you are at fault in an accident.

There are elements of no-fault in all auto insurance coverage. For example, medical payments and property damage are typically paid regardless of fault.  Under a pure no-fault system, your auto insurance provider pays for any economic damages, such as medical bills or lost wages, up to the policy limit. You are completely prohibited from suing a negligent driver for “non-economic” damages, such as pain and suffering or loss of companionship.

 At the present time, no states function under a pure no-fault system. Instead, all thirteen no-fault states have adopted a modified no-fault system. This means that your insurer still pays for your economic damages up to the policy limit, but you may be allowed to sue for non-economic damages if the amount of these damages exceeds a specified threshold.

 Beyond the above very simplified explanation of no-fault insurance, there are many and varied real life applications of it. The point to remember, though, is that although no-fault insurance for states may sound appealing at first, rising insurance costs have led some states that presently have it to re-examine its effectiveness. For example, Colorado may be allowing their no-fault status to sunset, although insurance.com didn’t note the change.