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16 Transcript 1 (1971-1972)

handle is hein.barjournals/tscb0016 and id is 1 raw text is: NO-FAULT INSURANCE ON THE NATIONAL LEVEL WAILLACE, S. NIURIPIIY* A proposal to establish nationwide no- fatlt autonlobile insurance was inlroduced in tile United States Senate in February of this year, and is, as of this writing, in the Senate Commerce Committee. The bill was extensively revised in Conmittee. The ver- sion used in preparing this summary is Com- millee Print One, July 1971. The no-fault instlirance bill, S. 945, was inlroduced by Senator Hart, on behalf of himself and Senator Magnuson, as part of a three-bill package. S. 945 provides for nationwide, compulsory no-fault insurance; S. 946 permils group motor vehicle insur- ance; and S. 947 would amend the Internal Revenue Code of 1954 to exclude from gross income contributions by employers to plans providing motor vehicle insurance coverage for employees. Only 3. 945, the 'Hart bill, will be discussed helr in. No-fault insurance is presently in effect in Puerto Rico, Massachusetts, Delaware, Illi- nois and Florida. Recent newspaper reports state that the experience thus far has been favorable, restulting in lower costs and quicker settlements. However, it is ob- viously too soon to determine the true value of no-fault insurance in terms of protective and monetary benefits received per premium dollar paid. It has become apparent in recent years that tile present system of motor vehicle liability insurance needs comprehensive examination. In the eyes of the public, such insurance is too expensive. The insurance industry is quick to point out that the high cost of insurance is the result of excessive claims, high verdicts in tort suits, high cost of repair of both car and body. and high overhead. A great part of the blame for this high cost is laid to our present sys- tem of tort liability, with litigation being said to be encouraged by permitting lawyers to charge contingent fees. Fo these charges, G General Counsel S. C. t'ithltc Serstce Authority Moncks Corner, S. C. the legal profession asserts that contingent fees permit the poor to claim their just rights which would otherwise be denied them, and that verdicts are not. as a general rule, exces- sive. And so the arguments go back and forth, with the public cauight square in the middle. It is in direct appeal to the paying public that no-faull insurance proposals are addressed, with their promises of lower prenlium rates and just settlements quickly paid. Every member of the legal profession owes it to the public, the legal profession, his clients and himself, to examine no-fault proposals carefully and take his stand on the basis of truc insurance value received for the premium paid. It is for this purpose that the following summary of the Hart bill, S. 945, is offered. General. The main features of the I-art bill are: (t) nationwide, compulsory no- fault insurance; (2) almost complete tort immunity; (3) an assigned claims plan; and (4) extensive rule making power vested in the Federal government, probably in the Secretary of Transportation (hereinafter the Secretary). This bill, to be cited as the National No- Fault Motor Vehicle Insurance Act, is just- ified on the basis of the Congressional power to regulate interstate commerce. Al- though specific provisions of the bill may be open to attack on constitutional grounds, there is little doubt that the regulation of motor vehicle insurance will be held to be a valid exercise of Congressional power. Compulsory Insurance. Section 4 of the Hart bill provides that a qualifying no- fault policy, the requirements of which are set forth in Section 5, is a prerequisite to the registration, operation or use of a motor vehicle in any State at any time. The in- surance requirements may be satisfied by providing a surety bond, proof of qualifica- lions as a self-insurer, or other securities deemed sufficient by the Secretary. A knowing violation of the foregoing in- surance requirements is declared to be a misdemeanor punishable by a fine of not to exceed $1,000 or imprisonment for a period not to exceed six months, or both. States are granted concurrent utliority to prosecute such offenses. States are expressly forbidden to require any other insurance or security as a condi- tion precedent to the ownership, registra- tion, operation or use of any motor vehicle that is inconsistent with a qualifying no- fault policy. l)efinitions. To Lunderstand the more im- portant provisions of tie Hart bill, the terms economic loss and net economic loss must be fully defined. 'The benefits payable under the no-fault insurance policy required by the Hart bill are stated in terms i I net econonic loss. Economic loss means the sum of (I) all appropriate and reasonable expenses neces- sarily incurred for medical and related ser- vices; (2) $1,000 per month, or the monthly earnings (after income taxes) lost, which- ever is less; and (3) all other appropriate and reasonable expenses necessarily incur- red, including the cost of substitute services, funeral expenses, and attorneys' fees and costs to the extent provided in Section 8 of the Hart bill. Net economic loss means economic loss, as defined above, less any benefits received from any public health insurance or plan, and less any benefits received from any private insurance or plan which contains explicit provisions making its benefits pri- mary to the no-fault benefits. In the case of a person regularly emi- ployed or self-employed, monthly earnings means one twelfth of such person's average annual compensation or earnings at the time of injury or death. In the case of a person not regularly employed or self-employed the term ieans one twelfth of the anticipated compensation from the time such person (Continued on Page 4) /

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