The Failure of No Fault Auto Insurance

The insurance industry bitterly opposes pro-consumer reforms that would force insurers to justify their rates, limit excessive profiteering and waste and create a more competitive marketplace.

To counter campaigns seeking such reforms, insurance companies have promoted "no fault" auto insurance. No fault mandates limits on claims by and compensation to auto accident victims, in effect limiting public access to the courts. The industry's no fault approach focuses on reducing policy benefits for victims while at the same time expanding coverage to include those who cause auto accidents.

Despite the limitations on consumer rights, no-fault systems have consistently produced higher premiums for drivers than states using an insurance system based on personal responsibility, rather than one that assigns no fault.

FTCR's 2005 No Fault Premium Study
This study details how much more expensive insurance is for drivers in states with no-fault systems rather than personal responisbility systems.

More Information

History of the No Fault Concept
This is a brief explanation of no fault, who came up with the idea and its history.

A Failed Experiment: Analysis and Evaluation of No Fault Laws
This is a detailed look at how no fault laws have worked in practice. Data from no fault states shows that no fault increases premiums while restricting consumers' rights.

An Analysis and Critique of the RAND Corporation's Studies in Support of No Fault Laws
Santa Monica, California-based RAND Corporation has repeatedly issued studies suggesting that no fault will lower premiums (even though it never has). This is a review and discussion of the RAND reports.

"Choice" No-Fault and Other Recent Proposal
A detailed analysis of various no-fault insurance proposals presented by the insurance industry... more

Proposition 200
The 'Pure No Fault' Initiative, California, 1996 - This long (18 pages) and complex ballot initiative, rejected by California voters in 1996, would have eliminated the principle of "fault" in every auto accident case, no matter how severe (except those involving criminal activity).