Opening Argument – How to Save $ 30 Billion a Year in Car Insurance
by Stuart Taylor, Jr
Imagine a system that takes $ 350-$ 1,500 a year from motorists to insure them against liability for bodily injuries; funnels 55 per cent of that to lawyers and insurance companies; pays out most of the rest in ”pain-and-suffering” damages to accident victims and a growing legion of fraud artists; dispenses just 15 per cent to victims for monetary costs such as doctors’ bills and lost wages; and grossly undercompensates those with the most-severe injuries.
That’s our car insurance system, as shaped by a tort litigation regime that pits driver against driver in a futile quest to assign blame for accidents and provide compensation for intangible injuries that money cannot heal.
Premiums have shot so high that the push for reform has become a potent political issue. The proposed Auto Choice Reform Act, now pending in Congress, has enough support to alarm even the mighty trial lawyers’ lobby. But lest it be dismissed as mere lawyer bashing, note that the auto-choice bill is also opposed by many insurance companies–the betes noires of the trial lawyers.
Unlike conventional tort-reform proposals, the auto- choice bill is assiduously crafted to blunt complaints that it would strip accident victims of their rights. Although it would leave a few injured parties with less compensation, it would leave most with more, while offering all car owners a new right: to save hundreds of dollars in premiums each year by giving up their current rights to seek monetary compensation for any pain and suffering that they themselves may suffer. (Economic damages cover measurable monetary costs, such as medical expenses and lost wages; pain-and-suffering damages compensate for intangible injuries such as physical and emotional distress.)