Chapter 23 - Auto Insurance and Society - Chris Flashcards
What does a financial responsibility law do?
requires proof of financial responsibility AFTER the driver has HER/he first accident or until after conviction for certain offenses, such as DWI.
What are four ways to show evidence of financial responsibility?
- Producing evidence of an auto liability insurance policy with at least certain minimum limits
- Posting a bond
- Depositing the amount required by law
- Showing that the person is a qualified self-insurer
What are two defects of financial responsibility laws?
- There is no guarantee that all accident victims will be paid
- state laws require only minimum liability limits, which are relatively low
What is a compulsory insurance law?
This law requires motorists to carry at least minimum amount of liability insurance before the vehicle can be licensed or registered
PS. mandatory insurance does not reduce the number of uninsured drivers
Three states (MI, NY, ND) have established unsatisfied judgment funds. This is a state fund for compensating auto accident victims who have exhausted all other means of recovery. What are four characteristics of this fund?
- The accident must obtain a judgment against the negligent motorist and show that the judgment cannot be collected
- The amount paid by the fund is limited by state law and may be reduced by collateral sources
- The negligent driver must repay the fund
- States use different methods for financing the benefits, e.g., through insurer assessments
What are four characteristics of uninsured motorists?
- The injured person’s insurer agrees to compensate for bodily injury caused by an uninsured motorist, a hit-and-run driver, or a negligent driver whose insurer is insolvent
- One advantage is that claim settlement is faster than a tort liability lawsuit
- The injured person must show that the uninsured motorist is legally liable for the accident
- The minimum limits are low, so an accident victim may -not be fully compensated
What is low-cost auto insurance?
provides minimum amounts of liability insurance at reduced rates to motorists who cannot afford regular insurance. goal is to reduce the number of uninsured drivers
What is the “no pay, no play” law?
this prohibits uninsured motorist from suing negligent drivers for non-economic damages.
What is the No-fault auto insurance?
This means that after an auto accident involving bodily injury, each party collects from his or her own insurer regardless of fault.
Ps. Enacted because of dissatisfaction and defects in the traditional tort liability system.
What is a pure no-fault plan?
accidents victims cannot sue at all, regardless of the amount of the claim.
What is a modified no-fault plan?
Victims have a limited right to sue
- May sue if the bodily injury claim exceeds a certain monetary threshold EX:$5,000
- May sue if the bodily injury claim exceeds a verbal threshold EX: if the injury involves death, dismemberment, disfigurement, or permanent loss of a bodily member or function.
What is an add-on plan?
Pays benefits to an accident victim without regard to fault, and the injured person has the right to sue the negligent driver who caused the accident.
This is not a true no-fault plan.
What is a choice no-fault plan?
motorists can elect to be covered under the state’s no-fault law and pay lower premiums or they can retain the right to sue under the tort liability system and pay higher premiums.
No-fault benefits are provided by adding an endorsement to an auto insurance policy. The endorsement is typically called “Personal Injury Protection coverage (PIP)”. What are the five injured person’s economic loss that is covered in this plan?
- Medical expenses
- Loss of earnings
- Essential services expenses, e.g., housework
- Funeral expenses
- Survivors’ loss benefits
True or False. No-fault laws cover bodily injury and property damage.
FALSE
they only cover bodily injury and not property damage.
PS. Expect in Michigan- motorists are allowed to sue for property damage.
