No to no-fault

Lawmakers should reject return to previous car insurance system

Rocky Mountain News

Monday, April 7, 2008

Colorado's 2003 switch from a no-fault to a tort car insurance system is one of the state's more successful policy initiatives in recent memory.

A study commissioned by Gov. Bill Ritter released in February found that Colorado's auto insurance premiums had dropped by 35 percent since the tort system was adopted. Since 2002, the year before the switch to tort, auto insurance premiums per vehicle in Colorado have fallen from the ninth-highest in the nation to 21st.

So it's baffling that some lawmakers would consider reverting to no-fault, though the plaintiffs' bar and the medical providers that cashed in from the earlier system would certainly applaud.

Such a move is afoot, sadly. And to be sure, calls for reform are being driven by more than a desire to placate no-fault's beneficiaries. Still, the tort system has worked so well that lawmakers would be foolish to replace a policy winner with a failed alternative.

Three bills pending in the legislature would reinstate the sorts of consumer-hostile mandates that existed in the no-fault era. Senate Bill 11 and House Bill 1009 would force auto insurance policy holders to carry an additional $15,000 in medical coverage and target payments to first responders, emergency rooms and trauma centers. SB 11 would also add $16 to motor vehicle registration fees and direct payments to emergency medical services.

Senate Bill 211 would force policyholders to carry $25,000 in coverage for bodily injuries. It would also give first responders, ERs and trauma centers first dibs, but it would let chiropractors and other providers of "rehabilitative services" get in line, too.

A fourth bill, yet to be introduced, would return no-fault in its entirety, though it would not require consumers to buy as much insurance coverage as they did under the previous regime.

Backers say the tort system has delayed reimbursements to medical providers when injury accidents occur. But the 2006 legislature addressed the problem with a bill signed by Gov. Bill Owens. It requires medical claims under the tort system to be paid within 30 to 45 days.

Carole Walker, executive director of the Rocky Mountain Insurance Information Association, told us she's unaware of any independent reports indicating tardy payments. She notes, though, that damage estimates for vehicles are often determined immediately, while it can often take weeks or months for doctors to fully assess treatments needed for auto accident injuries - and bill for them.

As the governor's study noted, the mandate for add-on coverage smacks of the no-fault system's requirement for drivers to carry "personal injury protection" to cover medical costs. PIP policies drove insurance costs under no-fault skyward.

These proposals treat auto insurance premiums as an ATM, pumping more money to first responders and trauma centers. Perhaps some sort of broad-based revenue stream (like the registration fee in SB 11) is justified to make sure emergency services remain available, especially in rural areas. But that's a separate policy debate. There's no reason to scrap the tort system that has delivered lower costs to consumers at a time so many other items in family budgets have grown more expensive.

• April 7, 2008

  5:08 a.m.

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  roger44 writes:

  the federal government has failed the citizens, state governments may as well follow suit. We will be walking to work next.

• April 7, 2008

  6:36 a.m.

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  Earl writes:

  the current system was put in under owens term so now the dems are out to ruin it and once again raise 'fees' and mandate more for their buddies the trial lawyers I meant fees for medical staff.
  why not go after the ones with no insurance at all mostly illegals as they dont care. we all know how as da of denver ditter was ever so tough on cases that had illegals in them. sorry they are a large problem and most have all fake ids and know they can blow off a court date cause nobody can find them.
  ok lets raise insurance costs on US citizens as its only fair.

• April 7, 2008

  6:41 a.m.

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  VVVV writes:

  This is just the lawmakers trying to take the easy route, yet again. Instead of tackling the real issue that is starving the EMTs and emergency rooms - bad health care policies, they'd rather tack the premiums on to those who can afford to drive a car, and are honest enough to ensure it. Just another roundabout way to tax the middle class to protect the poor. Consumers will always get the least consideration when there is plenty of lobby money pouring in from hospitals, insurance companies, and every other company that is in real control of our government.

• April 7, 2008

  7:09 a.m.

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  vudumom writes:

  My husband and I just recently had to switch insurance carriers after seeing no reduction in our premiums. Our premiums went up after the reforms. We are forced to keep full coverage on 2 vehicles that are 8 and 9 years old because of the state's unwillingness to deal with the minimum of 40% of people driving without insurance.We have never had an accident that was our fault ( someone hit my husband from behind while stopped at a red light )or a ticket. We asked our insurance carrier when are our rates going to go down,no clear answer so we had to shop elsewhere. I think insurance rates are outrageous in Colorado.I dont understand how the rates could be so much for a longtime married couple,with perfect credit,no accidents ,no tickets and one vehicle gets driven very little.We were told insurance premiums were high because of the high % of drivers in Colorado who are uninsured and the state's failure to implement a system of checking to see who has insurance. if you get a ticket all you get is a $40 fine for no insurance. Is that a deterrent?

• April 7, 2008

  8:13 a.m.

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  DRRKREMER writes:

  The tort system works UNTIL you are in an accident. Then, you can expect delays and finger pointing to establish who is at fault. There are delays in receiving health care and the insurance company and television advertising lawyers determine your settlements and benefits. In a civilized world there has to be a better way.Say NO to tort and YES to a more rational solution that brings resources back to the injured/damaged and not the insurance companies and lawyers pockets.
  Insurance companies may be opposed to a return to mandates due to their profits being reported to be at an all time high! A practical example of how auto insurance has gone to the lawyers, is demonstrated by picking up a telephone book and asking your insurance company how many lawyers or law firms they retain to deny and fight claims.

• April 7, 2008

  8:16 a.m.

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  KelcyCo writes:

  I didn`t see our insurance rates go down no thirty five percent. Where is the RMN getting their data? Real people or the insurance companies which would not tell the truth even if someone had a gun to their collective heads. No company is going to give up income just because a law changes. No doubt their reformatted their insurance printouts to parse out the data and charge each item individually with the bottom line being the same. This happens EVERY TIME some law is passed that is supposed to be good for the consumer. NOT!

• April 7, 2008

  8:21 a.m.

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  DRRKREMER writes:

  I agree. In my sphere of influence NONE have reported a reduction in premiums. To maintain comparable coverage to pre-2003 it ACTUALLY COSTS MORE for the same coverage now. Anyone reporting less premium has also less coverage and more personal exposure and risk to losing your assets. Pray that you are not involved in a car crash and if you are that you are not at fault. That's when it hits the fan and you get a tasteof the stark reality of being underinsured.

• April 7, 2008

  8:33 a.m.

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  mark79trans writes:

  I moved from Colorado to Washington for seven years. When I came back to Colorado in 1998 and notified my insurance carrier, my 6 month premium jumped from $360 to $800 under the Colorado no-fault policy. The old Colorado law was horrible. The whole point of liability is to cover medical related injuries...the liability coverage can be clarified to ensure reimbursement of the ERs. With PIP (Personal Injury Protection), we pay two line items for liability and PIP. The PIP coverage was a mandate and included a bunch of alternative treatments as well as it was abused for preexisting conditions. Personally, I would prefer to not go back into the top 5 most expensive states. Each person can choose additional coverage if they want; why do we need the government to mandate this?

  Going back to the tort system was done by the sunset clause in the PIP legislation. Every year a new bill is dropped to shift costs back to Colorado drivers. And, for those of us who have multiple vehicles, we then need to buy this stupid coverage multiple times. If this legislation passes, my family will be paying $300-$500 more every six months.

• April 7, 2008

  8:56 a.m.

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  Houstongolfnut writes:

  There is something of importance missing here. And that key aspect of the survey could be that total premiums as a whole paid by Coloradans dropped because fewer and fewer bother to buy auto insurance each year. Under no fault, your auto insurance paid for that ambulance ride to the emergency room. Now nobody is paying for those rides and it's killing the EMS budgets of mountain counties. And your property taxes go up to pay for those "free riders". Thanks.

• April 7, 2008

  9:01 a.m.

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  kathyM writes:

  I lived in Michigan, a no-fault state, for 20 years. During those 20 years, my family was involved in two accidents. It was a relief NOT to wait for the cops to determine who's "at fault," NOT to have to hire a lawyer and argue fault in court, NOT to have huge bills from the lawyer. We paid our deductible, got our vehicle repaired, and moved on with life. I also knew a number of people who were severely injured in auto accidents. Their medical care, loss-of-income, and related payments were made quickly, with very little fuss. They didn't have to hire a lawyer to get their bills paid, nor did they have to go through the agony of a court battle over fault.

  Of course the system wasn't perfect. The insurers got dinged every so often for having too much cash and had to refund some money. But for the most part, it worked for everyone--except the PI lawyers.

  When we moved to Colorado last year, our auto premiums went up. I asked my agent why, and he said it's because of hail. Riiiigggghhhht.

  I fear for my family's financial future if we get in an accident in Colorado.

• April 7, 2008

  9:22 a.m.

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  evan writes:

  We need a switch back to some form of coverage. Auto rates did not go down. It is more $ to carry the same coverage. Thats like saying I can sell you a car for 15% less but will take away 70% of the vehicle. Rates went down (not mine) 10% and people lost atleat 80% of coverage. Insurance companies have record profits. I am sure that this article was written with "help" with some info form the auto insurers. NEVER get in a crash with no medpay. This cost shift has increased health insurance premiums (they are now being forced to cover car crashes) Most people do not have insurance or can even afford thier deductibles, co pays... This law is only good if you are a CEO of an auto insurance company. Just look at the independent study from the governers office. Cost has been shifted to us. Tax payers in colorado. Period end of story!!

• April 7, 2008

  9:49 a.m.

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  JanetW writes:

  "I didn`t see our insurance rates go down no thirty five percent. Where is the RMN getting their data?"

  Try reading the article. The 35% number came from Governor Ritter.

  Argue all you want whether or not you personally saw a 35% increase. One thing is certain, if we go back to no-fault, your rates are going up... by a lot. By my back-of-the-envelope calculations, if they went down 35%, that means that going back to the old system will raise rates by 50% (try the math yourself and you'll see what I mean).

  So this is what we've come to: a 50% rate increase. Not exactly good policy...

• April 7, 2008

  10:55 a.m.

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  mark79trans writes:

  For those that are complaining about your insurance not going down...I don't know about your carrier or driving record, but my insurance with an A carrier went down about 40% when I removed the PIP from four cars. This drop included raising my liability coverage from the minimum to $250,000. However, in three decades of driving, I never entered one claim so I receive the benefits of a tort system...I am not the one causing the accidents so I get huge discounts up until the point of putting no-fault mandates on the coverage. I get pretty testy about subsidizing those that cause the accidents...they should pay! I have no problem with those that cause accidents to pay more in insurance. I am sure the net-beneficiaries would love to see no-fault be law again.

• April 7, 2008

  11:13 a.m.

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  xeeian writes:

  Keep the tort system! Help the tort lawyers! Keep the billable hours up!

• April 7, 2008

  11:39 a.m.

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  CentiCol writes:

  We have seen both sides of this issue. We were providers of rehab. 90% of our business was from auto injuries. Until you've been in an auto accident you don't know how nice it is to know your bills are coverd. If you are lucky to have health insurance are you interested in paying your deductible first? Hope you have the money for it if you can't work. We only saved about $30 for two cars. For an additional $80 for both cars we were able to only get $5000 in medpay on our auto insurance. For the same price we used to have $100,000 in coverage. What a deal, less coverage for more money. Medical bills are not getting paid, providers are going out of business, and many will not treat you if bills are going to be paid through tort. We are still waiting to be paid, over three years, for therapy we provided. How many of you can wait three years for a paycheck, then have to settle for only 25-50% worth what you should get. Do you really think the governor and insurance compaines changed this system because they wanted to help the common man, get real. It's all about the money and how little they have to pay and how long they can drag it out. The lawyers don't seem to be doing too bad either. Every accident goes to court to determine fault since nobody wants to be at fault for an accident. The bills aren't paid till it's settled, we're still waiting. What a great system for everyone.

• April 7, 2008

  11:41 a.m.

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  Seabreezes writes:

  Something else to consider about auto insurance....what you drive, and where you live. You drive a beat-up '85 Honda in, say, Limon, you're rates are gonna be lower than the guy driving the '04 Beetle in Denver. Also, CO isn't actually that bad for insurance. Florida has PIP/PD and is no fault, rates are about 15% more than here. Texas only requires liability, but is not no fault. Rates are comparable to here, but after 1 wreck, your carrier can drop you, and the next gets to bleed you dry for having said wreck. And no, getting a $40 ticket for no insurance is not a deterrent. If you pay more for gas than for breaking the law, something needs changed.

• April 7, 2008

  11:56 a.m.

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  evan writes:

  I will bet that the "author" of this is "lobbiest for auto insurance." This is horrible PR and mis-information to the public. I do not see any "real world" scenarios of how tort really works. How about all the people that were sent to collections, are in chronic pain, and not nearly as productive as before and now on disability! All because the insurance companies would not pay thier bills and they could not get appropriate care and forced to litigate. Tort is a horrible system. Why would rates double? It costs about $10 a month to get $100,000 med pay. If we get $25,000 it should be $2.50 a month. Most injured people just want treatment. Not to be forced to sue and get dragged through the legal system. Look at the CNN investigation from anderson cooper on auto insurance. (You tube it). It is legal organized crime.

• April 7, 2008

  12:03 p.m.

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  mbcoady writes:

  My insurance did go down 30% after my $200,000 in medical was removed plus extended wage loss coverage. Since then I have had to add a disability policy and emergengy medical coverage on top of my health coverage as I am self employed. My net auto savings after the change from no fault was $600 per year. Now, my additional health care coverage adds $66 per month or $792 per year and I have less coverage then before.

• April 7, 2008

  12:24 p.m.

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  Earl writes:

  I SAY LETS HAVE AUTO INSURANCE PAID FOR BY THE GOVERNMENT ALONG WITH FREE HEALTH CARE AND LETS ADD FREE OIL CHAGES TOO.
  why doesnt ditter want free auto insurance?

• April 7, 2008

  12:54 p.m.

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  pwern writes:

  HoustonGolfNut: If you're so concerned about EMS response in mountain communities, then maybe you should consider living more closely to an urban area rather than suggesting that this is good law because it will force the rest of us to subsidize your lifestyle choice. Those who choose to live in a rural setting waive any right to complain about not having all the comforts of urban areas. It like me complaining about traffic and air pollution in Denver and expecting rural communities to raise fees to address problems that don't concern them.

  The bottom line on this legislation is that it is a pander to trail lawyers. Period. And that's common ground that should until us against it no matter where you live in Colorado.

• April 7, 2008

  1:37 p.m.

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  JanetW writes:

  mbcoady:

  Your auto insurance went down, but because you then had to buy health insurance, you're paying more.

  Coupla questions:

  You mean to say that under the old system, the only place you had health coverage was in your car?

  Are you suggesting that having health coverage which (presumably) now extends beyond the confines of your car should not cost more? Isn't that apples and oranges?

  If we went back to no-fault, you'd drop your health insurance? And be once again covered only for car accidents?

  My head is spinning.

  Long story short: Since I already have health insurance (I also pay for my own), why is the government trying to force me to buy duplicate insurance through no-fault?

• April 7, 2008

  2:24 p.m.

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  jjez writes:

  Maybe it should be like Mass. If you have no insurance, they will pull you over, take your registration, tow your vehicle and you can't drive it again until you get insurance & re-register the car. DPD is already installing cameras that will scan plates to find stolen cars, why not those not insured? Sure would cut down on the traffic, wouldn't it? If 40% truly aren't insured, that would get 40% of the vehicles off the road.

• April 7, 2008

  3:20 p.m.

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  mark79trans writes:

  jjez
  Auto insurance should be changed to Driver's Insurance. Automobile owners insure their car(s) for collision and comprehensive but all liability including medical coverage is tied directly to the driver. In order to obtain a driver's license, the driver must be insured. If the driver fails to maintain their insurance, their license is revoked.

  I do not agree with tying personal property to the equation. I should be allowed to own or operate a motor vehicle on private property without any insurance mandate.

• April 7, 2008

  3:25 p.m.

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  fmikey writes:

  Many posters above forget, or don't know, that in our current system, the injured party must PROVE that is is the fault of the other party he or she is accusing of causing the accident. Many people above seem to think that just 'cause someone is injured, they should get paid by the other party's carrier.....sort of the typical "somebody owes me" mentality prevalent in society.
  The fact is that coverage is available NOW under your own auto policy for your own injuries, irrespective of who's at fault...its called medical payments, and is typical available up to a limit of $50,000, but this is for hard medical bills only, not pain and suffering, general damages, which you have to prove to be the fault of some other party in order to collect. That's just the way the system works.
  The lawyers represent injured parties in cases where they feel another party is at fault. It is their responsibility to prove liability and damages (injuries). The insurance companies represent their own insured party, and say to the plaintiff "prove your case". The concept is simple, but is lost on the neanderthals in this column who are looking for a free ride on their insurance.
  And to bigot Earl at the top of the posts, yes, some "illegals" don't buy coverage, but there are MANY legal citizens who don't either, and are probably a greater problem than the "illegals". Try to keep up on the subject.

• April 7, 2008

  6:19 p.m.

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  Acemon writes:

  I can't speak for others, but basic coverage on my '92 Toyota pickup is a mere $195 per six-month term. My costs went waaaaay down.

• April 7, 2008

  7:39 p.m.

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  p_myers661 writes:

  Our insurance went down. It has gone down every year.

  No Fault is all about everyone paying for the bad drivers.

  Make it simple and safer.

  If a driver lacks insurance, a valid driver's license or registration a ticket should be issued. If any two items are missing the car gets towed.

  One big part of this is unlicensed, uninsured illegal immigrants. Channel 7 did a report on them. They strut into court, say they're sorry, pay a fine and then drive off still without the insurance, registration or license. I'd have officers stationed all over just waiting to stop them again and tow the cars.

  Some of the increase in prices is part of the inflation we all see. Many of those posting here don't remember how the tort lawyers loved the old system. It didn't take long for them to max out the old system and then go to filing lawsuits. The system was really great for fakers. The first bills were paid, a lawyer was paid by the lawsuit and they got it all. Most of the posters haven't had an accident under either system. As a former cab/truck driver, I have. My taxi took two weeks to repair after a reckless driver ( a teenager suffering from his girlfriend dropping him) came down a 35 MPH road at 70 and smashed into my car which was parked by the roadside. I attempted to get his insurance to pay for my lost wages. Such things were not part of any equation.

  In a truck we were charged with hitting a car and breaking the headlight. We got a ticket and the people in the car filed a suit against the truck company. Unfortunately for them, we had a digital camera. While the officer was talking to me, my husband went around the entire car taking pictures and then circled the truck. We took the ticket and faxed it to the trucking office along with pictures of the car with completely intact headlights and no dents of any kind. We looked hard for any marks on our very dusty truck and found none. The safety director listened and made notes. Two weeks later that same car, the same passengers and the same cop gave another driver a ticket for hitting that same car.

  They figured, since the state had no-fault insurance rules, that the companies would pay the several thousand without blinking. Our company filed charges with the DOT and the crooks were arrested, including the cop, for fraud. No fault encourages such things because the simplicity of charging your own insurance company is supreme.

  Insurance companies determine prices based on risk. In a NO_FAULT state, they have to include the people who will not have insurance and those who are just bad drivers.

  Please, leave the free market in insurance alone. Use enforcement of the laws requiring insurance, registration, a legal driver's license and legal immigration status. Implement towing of uninsured, unregistered vehicles. Deport illegals.

• April 7, 2008

  7:59 p.m.

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  kathyM writes:

  The debate between health insurance/no-fault insurance is interesting. Makes me wonder how much legal wrangling goes on between health insurance and auto insurance carriers when someone gets in an accident. Auto insurance won't pay til fault is established; meanwhile, accident victim uses health insurance; then health insurance denies claim because it should be paid for by auto carrier; and around and around. How in the world does that save money for anyone but the insurers?

  Many catastrophic injuries are caused by auto accidents. Michigan's no-fault law states that insured people injured in auto accidents have UNLIMITED medical, rehabilitation, and wage-loss benefits for three years. That removes the arguments between carriers and allows the accident victim(s) to be treated promptly.

• April 7, 2008

  8:19 p.m.

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  kathyM writes:

  pmeyers, I usually agree with you on many issues, but I differ on this one. No-fault doesn't mean free ride; the fraudsters you cited about took advantage of the fact that non-injury claims are not scruitinized closely. Insurance fraud is not exclusive to no-fault auto.

  I don't know what Colorado's no-fault law was like, but at least in Michigan the no-fault law is set up so each "party" in the accident is covered by his OWN insurance, NOT by "the other guy's." And if one of the parties is not insured, that's his problem.

  Any insurance system--not just no-fault--calculates prices based on risk, and takes into consideration the existence of uninsured and bad drivers.

• April 7, 2008

  9:54 p.m.

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  Bandaid writes:

  Auto insurance when switched from No-Fault to Tort really did not decrease premiums. You pay for basic coverage and should you desire Med-Pay you have to pay the extra amount for this coverage which gives you medical coverage at the time it is rendered and not when the care is totally completed. You are allowed to purchase a certain amount of med-pay coverage and pay for this in the increments of coverage you desire which is usually no more than $ 25,000.00. This puts your payment amount back to where you were with no-fault with less coverage which was $ 100,000.00. Tort only stresses your medical healthcare coverage and is now raising it out of site and you are paying higher deductables and co-pays. Add all these factors together and PIP would be the most reasonable and least expensive way to go in the long run.

• April 11, 2008

  9:33 a.m.

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  CCA writes:

  Medical claims under the tort systems are NOT required to be paid within 30 to 45 days. Only those who have purchased OPTIONAL medical payments insurance have the protection of a prompt payment law. Auto accident victims who are not “at-fault” may wait years for a settlement from the at-fault driver’s insurance company.
  In the settlement that comes months or years after the accident, insurance companies frequently pay out less than the patient actually owes in medical bills. Patients are left owing the balance to providers out of their own pockets because of these predatory practices.
  68% of auto accident victims have difficulty finding health facilities to treat their injuries under the current system. The reason is obvious. Many patients are not aware their injuries will not be covered by their auto insurance policies.
  Only 14% of patients have voluntary medical insurance on their auto insurance policies according to our studies. 33% of patients use health insurance for auto accident injuries. The Governor’s study on this issue shows health insurance companies raised their rates to compensate for the expenses they incurred by the change from no-fault to tort. Health insurance rate increases were greater than the savings auto policies passed onto the consumer after eliminating medical benefits.
  There are two schools of thought as to how these services should be paid for. Continue with the current system with taxpayers carrying the burden of the uninsured, or require motorists carry a small amount of medical coverage and be responsible for their own injury care. We believe the individual should be responsible for their own needs.
  The Colorado Chiropractic Association supports legislation that provides consumers with auto insurance Med-Pay coverage they need to recover from typical auto accident injuries quickly, without financial hardship. We hope you will also urge your readers to support Senate Bill 211.
  Dr. James Farrell, President Colorado Chiropractic Association
  chiropractor@q.com or 303-279-6448

• April 15, 2008

  12:13 a.m.

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  jm48 writes:

  The tort system SUCKS. Trying to prove who is at fault is ridiculous and expensive...i don't even want to admit how much i paid my lawyer to help get everything *some-what* settled. The tort system is a scam run by greedy insurance companies and greedy lawyers.