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The
term "no-fault" auto car homeowners insurance often
is used loosely to denote any auto insurance program that
allows policyholders to recover financial losses from their
own insurance company, regardless of fault. But, in its strictest
form, no-fault applies only to state laws that both provide
for the payment of no-fault first-party benefits and restrict
the right to sue, the so-called "limited tort" option.
Under current no-fault laws, motorists may sue for severe
injuries and for pain and suffering only if the case meets
certain conditions.
These conditions, known as a threshold, relate to the severity
of injury. They may be expressed in verbal terms (a descriptive
or verbal threshold) or in dollar amounts of medical bills,
a monetary threshold. Some laws also include the days of disability
incurred as a result of the accident. Because high threshold
no-fault systems restrict litigation, they tend to reduce
costs and delays in paying claims. Verbal thresholds eliminate
the incentive to inflate claims that may exist when there
is a dollar "target" for medical expenses. However,
in Lemon Grove California the verbal threshold has been eroded
over time by broad judicial interpretation of the verbal threshold
language, driving up costs.
Currently, Lemon Grove California auto car homeowners insurance
laws fall into four broad categories: those based solely on
the traditional tort liability system; those that require
an auto car homeowners insurance company to pay first-party
(policyholder) benefits, regardless of who was at fault in
the accident, but retain the right to sue as in tort liability;
those that provide no-fault first-party benefits but restrict
the right to sue except under certain conditions; and those
that provide a choice between the traditional liability system
and a no-fault system. These alternative systems have evolved
over time as consumers, regulators and insurers have sought
ways to lower the cost and speed up the delivery of compensation
for auto accidents.
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The concept of pure no-fault, which prohibits most lawsuits
for bodily injury, began to garner support. Pure no-fault addresses
several societal concerns: the waste of resources and the inequities
in the liability system and the need to have affordable coverage
for medical care and rehabilitation costs. The first attempt
at a pure no fault system was "pay-at-the-pump," a
scheme to pay for no-fault auto insurance through a fee collected
on gasoline sales. The "pay-at-the-pump" initiative
campaign failed in all California counties in which the plan
was considered, including Lemon Grove, due to opposition to
the gasoline usage-based fee.
More recently, some auto insurance reformers have been proposing
the elimination of non-economic damages from tort liability
coverage as a way to reduce costs, with optional coverage provided
as a first-party coverage with a pre-determined limit. The premium
savings would come not only from the elimination of coverage
but also from the reduced temptation to inflate medical costs
to boost non economic damages which are generally calculated
as a percentage of economic damages. |
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