Page images
PDF
EPUB

insurance have been doing with claimants for many years and are still doing today.

That settlements and verdicts which include sums for pain and suffering do not have a precise mathematical formuia is to the credit of the present system. A jury considers all the evidence presented to de termine the plaintiff's injury and the pain, suffering and inconvenience he was forced to undergo. The greatness of the system is that it allows individuals to be treated as individuals and allows human beings to assess the injury suffered by human beings. The fact that the pain and suffering caused one individual by another does not work into a computer program should not be allowed to determine whether an injured person will be denied his right to recover for that damage - unless a computer can also prevent one from ever sus. fering pain again. Forms of first party coverages are no substitute for compensa: tion for pain and suffering.

REDUCED DISABILITY BENEFITS

dure pain, suffering and inconvenience through no fault of their own and that, but for the carelessness of another individual, they would not have had to undergo that ordeal. The basic principle applies that a person who causes injury to another should be responsible for seeing to it that the injured person is fairly and adequately compensated. Anguish and inconvenience are now considered as much a part of that injury as the lacerated skin, torn muscles and broken bones. The vast sums our population spends on drugs, medical research, hospitals and doctors illustrates our dread of pain and shows that we will go to great expense to prevent or relieve it.

Also recognized is the concept that pain and suffering include much more than the actual physical hurt produced by the injury. A person with a broken limb is forced to endure discomfort and inconvenience as long as, and sometimes after, the bones mend and the actual physical hurt ceases. A person whose face is so scarred that plastic surgery can never fully succeed will suffer anguish and humiliation for the rest of his life. A young woman whose injury prevents her from ever bearing a child may suffer emotional anguish long after her wounds have ceased causing her physical pain.

The present system does not pretend to set an exact value on a quantum of pain so it can be multiplied by the claimant's total time exposed to that experience. No two human beings are alike, and it is logical to say that no two human beings experience pain to the same degree. Pain and suffering are not commodities avail. able in the marketplace. They have no going hourly rate as do the wages of work. men.

Today, the trier of fact is given the responsibility to award the plaintiff a sum thought reasonable for the total experience of pain and suffering he has undergone.

Insurance statistics show that about 98 percent of all auto claims are settled and that only 2 percent are ever determined through a full trial.10 Since so many cases are settled involving claims for pain and suffering, it indeed seems strange to suggest that a reasonable settlement for pain and suffering cannot be reached. This is exactly what the companies that write auto

10 Fact vs. Fiction, at 4, National Association of Independent Insurers (1968)

The AIA plan does recognize that, in some cases, a person may be partially or totally disabled by an auto accident and does attempt to provide a small benefit as "compensation" for that disability.

Under the present system, the trier of fact considers all the evidence presented on the issue of the plaintiff's disability and determines a reasonable award for that damage. Under the AIA plan the only individual consideration given to a disabled claimant will be the total of his medical and hospital expenses. This amount will be multiplied by a fixed figure up to fifty percent. The extent and nature of the disability will not be considered. In fact, the individual himself will not be considered, All that will matter are figures and deci. mal points on the hospital and doctor bills.

For example, a young secretary who lost a leg in an auto accident will be told: "We paid your medical and hospital expenses and your lost wages while you were away from work. Your wheel chair will fit behind a typewriter. But, since you are permanently disabled, we'll also give you an extra 50% of your medical and hospital bills. This will make up for the fact that you can't swim or dance, or engage in any of the other activities young girls of your age enjoy."

dition.

Such a plan will also "care for" the for scores of responsible motorists who use young father who loses his arms in an auto every means to avoid damaging the propaccident. Under its rehabilitation program erty of others and to assure that their own he may even be fitted with artificial arms vehicles are in good condition. so that he can again perform the tasks ex- AIA indicates that, under their plan, all pected by his employer. But, will an addi insurers would be required to offer a form tional 50% of the value of medical and of “physical damage coverage" (presumhospital bills compensate him for his in- ably similar to present forms of collision ability to teach his son to throw a football? and comprehensive coverages). It should Will it provide just compensation for the be noted that this coverage would be opimpairment of his ability to fully enjoy tional and that an additional premium life?

would be charged to those who wished it. The protection of the AIA plan is not as complete as the title suggests. It does Misunderstanding As To Need For not consider the fact that a person suffer

Coverage ing from a severe, permanent disability

If the plan were enacted, it is questionmay have relatively small hospital bills and medical expenses and that this would re.

able whether motorists would be sufficientduce the amount of the award. It is based

ly informed about its features to recognize on an easily calculated formula which

the need to acquire the additional physical treats each claimant as a computer entry

damage coverage. Most motorists do not rather than an individual.

consider their auto insurance as a group of separate coverages for which separate pre

miums are paid. They tend to view all PROPERTY DAMAGE LIMITATION

coverages as an indivisible whole for which The AIA plan presents a unique ap

a single premium is charged. It is reasonproach to liability for property damage. able thas many wou

able thas many would view the claimed 45 Today's motorist is liable for damage he percent premium savings under its new may cause to the property of others be

plan as a saving that would be realized cause of negligence. Insurance coverage for against the price now paid for a complete such property damage is a standard part auto insurance package – including colliof automobile policies. In addition, first sion and comprehensive coverages. This party insurance coverages are provided to

view is strengthened by newspaper overcover loss to one's own auto which would emphasis on the claim of 45 percent cost otherwise go uncompensated.

savings. Few have mentioned that only 19 Under the plan, owners of property

percent savings are claimed if physical other than motor vehicles would be treated

damage coverage is also added. Expecting a as additional insureds under a motorist's

45 percent saving, motorists might mistakpolicy. If, for example, a driver left the

enly purchase only the bare bones AIA road and struck and damaged a person's

coverage and not the additional physical home, the driver's insurer would pay the

damage option. Thus they would be exhomeowner for that damage. However, if

posed to severe financial loss in case of the driver would strike a car parked in

subsequent damage to their autos. front of the owner's home, the plan gives the driver and his insurer immunity from

Inequity In A Deductible any liability. All vehicle owners in a state One must also consider the fact that the enacting the plan would assume the risk of plan's physical damage coverage would cerdamage to their own vehicles. Thus, even tainly have some form of a deductible. The if the owner could conclusively prove that most common deductibles with present col. his car was properly parked and that the lision coverages are $50 or $100. However, damage was caused by another's negli under the present system, a vehicle owner gence, he would have no right to be re- may recover the $50 or $100 he paid for imbursed.

the cost of repair, if the damage was caused Such a change in the rules of liability by another's negligence. might be welcomed by parking lot op. This would not be so under the AIA erators and the owners of vehicles that are plan. Those causing property damage to one step away from the junk yard. How. the vehicles of others would be immune ever, it would be unjust and 'inequitable from liability. Up to the limit of the de

dure pain, suffering and inconvenience insurance have been doing with claimants through no fault of their own and that, for many years and are still doing today. but for the carelessness of another indi

That settlements and verdicts which invidual, they would not have had to under

clude sums for pain and suffering do not go that ordeal. The basic principle applies

have a precise mathematical formula is to that a person who causes injury to another

the credit of the present system. A jury should be responsible for seeing to it that considers all the evidence presented to dethe injured person is fairly and adequately termine the piaintiff's injury and the pain, compensated. Anguish and inconvenience suffering and inconvenience he was forced are now considered as much a part of that

to undergo. The greatness of the system is injury as the lacerated skin, torn muscles

that it allows individuals to be treated as and broken bones. The vast sums our pop

individuals and allows human beings to ulation spends on drugs, medical research,

assess the injury suffered by human beings. hospitals and doctors illustrates our dread

The fact that the pain and suffering of pain and shows that we will go to great

caused one individual by another does not expense to prevent or relieve it.

work into a computer program should not Also recognized is the concept that pain be allowed to determine whether an inand suffering include much more than the jured person will be denied his right to actual physical hurt produced by the in- recover for that damage - unless a comjury. A person with a broken limb is puter can also prevent one from ever suf. forced to endure discomfort and incon- lering pain again. Forms of first party venience as long as, and sometimes after, coverages are no substitute for compensathe bones mend and the actual physical tion for pain and suffering. hurt ceases. A person whose face is so scarred that plastic surgery can never fully

REDUCED Disability BENEFITS succeed will suffer anguish and humiliation for the rest of his life. A young wo- The AIA plan does recognize that, in man whose injury prevents her from ever

some cases, a person may be partially or bearing a child may suffer emotional an

totally disabled by an auto accident and guish long after her wounds have ceased does attempt to provide a small benefit as causing her physical pain.

“compensation" for that disability. The present system does not pretend to

Under the present system, the trier of set an exact value on a quantum of pain

fact considers all the evidence presented so it can be multiplied by the claimant's

on the issue of the plaintiff's disability and total time exposed to that experience. No determines a reasonable award for that two human beings are alike, and it is logi

damage. Under the AIA plan the only incal to say that no two human beings ex

dividual consideration given to a disabled perience pain to the same degree. Pain

claimant will be the total of his medical and suffering are not commodities avail

and hospital expenses. This amount will able in the marketplace. They have no go

be multiplied by a fixed figure up to fifty ing hourly rate as do the wages of work.

percent. The extent and nature of the dis

ability will not be considered. In fact, the Today, the trier of fact is given the individual himself will not be considered. responsibility to award the plaintiff a sum All that will matter are figures and decithought reasonable for the total experience mal points on the hospital and doctor bills. of pain and suffering he has undergone. For example, a young secretary who lost

Insurance statistics show that about 98 a leg in an auto accident will be told: percent of all auto claims are settled and “We paid your medical and hospital exihat only 2 percent are ever determined penses and your lost wages while you were through a full trial.10 Since so many cases away from work. Your wheel chair will fit are settled involving claims for pain and behind a typewriter. But, since you are suffering, it indeed seems strange to sug. permanently disabled, we'll also give you gest that a reasonable settlement for pain an extra 500% of your medical and hospital and suffering cannot be reached. This is bills. This will make up for the fact that exactly what the companies that write auto you can't swim or dance, or engage in any

10 Fact vs. Fiction, at 4, National Association of of the other activities young girls of your Independent Insurers (1968)

age enjoy."

men.

Such a plan will also "care for" the for scores of responsible motorists who use young father who loses his arms in an auto every means to avoid damaging the propaccident. Under its rehabilitation program erty of others and to assure that their own he may even be fitted with artificial arms vehicles are in good condition. so that he can again perform the tasks ex- AIA indicates that, under their plan, all pected by his employer. But, will an addi- insurers would be required to offer a form tional 50% of the value of medical and of “physical damage coverage" (presumhospital bills compensate him for his in- ably similar to present forms of collision ability to teach his son to throw a football? and comprehensive coverages). It should Will it provide just compensation for the be noted that this coverage would be opimpairment of his ability to fully enjoy tional and that an additional premium life?

would be charged to those who wished it. The protection of the AIA plan is not as complete as the title suggests. It does Misunderstanding As To Need For not consider the fact that a person suffer

Coverage ing from a severe, permanent disability

If the plan were enacted, it is questionmay have relatively small hospital bills and

able whether motorists would be sufficient. medical expenses and that this would reduce the amount of the award. It is based

ly informed about its features to recognize on an easily calculated formula which

the need to acquire the additional physical treats each claimant as a computer entry

damage coverage. Most motorists do not rather than an individual.

consider their auto insurance as a group of separate coverages for which separate pre

miums are paid. They tend to view all PROPERTY DAMAGE LIMITATION

coverages as an indivisible whole for which The AIA plan presents a unique ap

a single premium is charged. It is reason

a single premiun proach to liability for property damage.

able that many would view the claimed 45 Today's motorist is liable for damage he percent premium savings under its new may cause to the property of others be- plan as a saving that would be realized cause of negligence. Insurance coverage for

against the price now paid for a complete such property damage is a standard part

auto insurance package - including colliof automobile policies. In addition, first sion and comprehensive coverages. This party insurance coverages are provided to

view is strengthened by newspaper overcover loss to one's own auto which would emphasis on the claim of 45 percent cost otherwise go uncompensated.

savings. Few have mentioned that only 19 Under the plan, owners of property

percent savings are claimed if physical other than motor vehicles would be treated

damage coverage is also added. Expecting a as additional insureds under a motorist's

45 percent saving, motorists might mistakpolicy. If, for example, a driver left the

enly purchase only the bare bones AIA road and struck and damaged a person's

coverage and not the additional physical home, the driver's insurer would pay the

damage option. Thus they would be exhomeowner for that damage. However, if

posed to severe financial loss in case of the driver would strike a car parked in

subsequent damage to their autos. front of the owner's home, the plan gives the driver and his insurer immunity from

Inequity In A Deductible any liability. All vehicle owners in a state One must also consider the fact that the enacting the plan would assume the risk of plan's physical damage coverage would cerdamage to their own vehicles. Thus, even tainly have some form of a deductible. The if the owner could conclusively prove that most common deductibles with present colhis car was properly parked and that the lision coverages are $50 or $100. However, damage was caused by another's negli- under the present system, a vehicle owner gence, he would have no right to be re may recover the $50 or $100 he paid for imbursed.

the cost of repair, if the damage was caused Such a change in the rules of liability by another's negligence. might be welcomed by parking lot op This would not be so under the AIA erators and the owners of vehicles that are plan. Those causing property damage to one step away from the junk yard. How- the vehicles of others would be immune ever, it would be unjust and inequitable from liability. Up to the limit of the de

ductible, the vehicle owners would be self- sider present rates to be adequate.12 Thereinsurers for damage caused by other driv- fore, it is important to know how great an ers. Therefore, if a person parked his car increase in present rates would be needed in front of his home and it was struck by to make them adequaie. a vehicle operated by a drunk, the owner An indication of how much of an inwould have to pay the first $50 or $100 of crease would be needed came at the press repair bills. If he failed to purchase physi. conference called by AIA to announce its cal damage coverage he would have to pay new plan. Under questioning by reporters, the full repair bill himself. The drunk an AIA official said that today's rates are would have no liability whatsoever.

10 to 15 percent inadequate in most

states.13 This places the claims of cost savElimination Of Individual Responsibility ings in a different perspective. For exam

It should be clear that elimination of ple, if a person is presently paying $100 tort liability for damage caused to the for his auto insurance an adequate rate automobiles of others may seriously affect would be between $110 and $115. Under the attitude of some motorists toward traf- AIA's new plan any rate reduction would fic safety. Since all motorists would be be from such increased premium figures. responsible for damage to their own ve- In this example, if a 190% saving were in hicles and tort liability would be complete- fact realized, the policyholder who is now ly eliminated, persons driving loaned ve paying $100 for his insurance would end hicles or very old autos of minimal value up paying between $89.10 and $93.15 for would have no incentive to avoid the his insurance. His actual savings over his slight scrapes and bumps with other ve- present rates would be between 10.0 and hicles that may occur while driving on con- 6.85 percent. It should be noted that the gested city streets or while parking. It may average American motorist is presently give some motorists an opportunity to vent paying much less than $100 a year for his their anger on others whose driving habits insurance. Therefore, savings for the they don't condone. For example, the average American motorist, if the plan driver of an old, dilapidated auto, cut off were enacted and actually produced savat a stop sign by an expensive late-modelings, would be very very small. foreign car, could catch up with his antagonist at the next stop sign and give him

Will Cost REDUCTIONS MATERIALIZE? a good jolt with his bumper. If the new car suffered property damage as a result of

It of Since the AIA plan is not in effect, opinthe incident or if one of its occupants suf.

ions as to the cost of that plan once it is fered personal injury, the driver of the old

in operation are at best estimates. Actuauto would not have to pay since all tort

arial studies must be projected on present liability is eliminated.

data. It is of paramount importance to

consider the plan's cost study to determine CLAIMS OF REDUCED COST

its validity as well as the assumptions ac

cepted by them to establish its cost analyIt is important to study the details of sis. the AIA proposal to adequately analyze its An actuarial analysis of the AIA study claimed savings in rates. In the brochure revealed the following:15 which describes the no-fault plan, the following statement is made concerning its 1. In costing out its compulsory accicost saving estimates:

dent and disability plan, the AIA It should be noted that the indicated 12Hearings Before the Commerce Subcom of the savings are amounts by which premium

Senate Com on Commerce on SJ Res 129 at 120-63

(Mar 14, 1968) for private passenger automobile insur

13 Wise, Automobile Insurance: Which Road To. ance could be fully reduced from ade. ward Reform? American Mutual Insurance Alli

ance Pamphlet (Nov 20, 1968) quate present rates." (Emphasis added)

14U.S. News & World Report (July 9, 1968) Statements made by AIA officials during 15Note 13 supra; we have been advised that the

National Association of Independent Insurers has recent Congressional hearings on the De.

also been studying the cost figures used to develop partment of Transportation study of auto the AIA plan and that Nåll's study, to date, reparations indicate that they do not con indicates that the plan would produce no savings

in average premium charges. If anything, the plan 11 Note 1 supra at 8

would probably increase premiums.

« PreviousContinue »