Word: fault
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Dates: during 1960-1969
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...company pays him directly for his losses. But a liability policy does not protect a driver against the cost of injury to himself; it protects him against the possibility of having to pay for someone else's injuries in the event that a court finds him at fault. Once that happens, the driver's company must pay the judgment against him. And with its own money at stake, the company usually tries to beat down the victim's claims, however just. As damage awards mount, the industry compensates for its losses by raising everyone's premiums...
...assessing the legal responsibility for auto accidents. In the six states* that have "comparative negligence" laws, a victim who is partly responsible for a crash can recover a proportionate percentage of his losses. In the other 44 states, unless the victim can prove that the policyholder was entirely at fault-and that he himself was utterly blameless-the company need not pay him a cent. Indeed, the worse the accident-a ten-car chain collision, for example-the more difficult it usually is to pin sole blame on one driver and reimburse anyone. If a driver has a heart attack...
Almost inevitably, the fault system results in wildly erratic settlements. Insurance companies are notorious for overpaying small "nuisance" claims because it would cost more to fight them than to settle. At the same time, the seriously injured victim with high economic losses is often unable to wait for his case to come to trial and is forced to settle for whatever the company offers. If he does gamble on going to court, he may lose the case and get nothing. On the other hand, if he wins he may hit the jackpot...
...fault system also forces insurers to compete almost entirely for "preferred risks"-drivers who seldom drive and people most likely to impress juries if they do get into trouble. As a result, thousands of unpreferred motorists have been unceremoniously stripped of their policies or forced to pay sky-high surcharges, not only because of accidents, but sometimes because they happen to live in "red line" (claim-prone) areas or belong to supposedly risky groups-a category that includes the young, the old, Negroes, actors, barbers, bartenders, sailors, soldiers and men with frivolous nicknames like "Shorty." Divorcees are often blackballed because...
...insurance industry a favor and take over the auto-accident business entirely. Urban Specialist Daniel P. Moynihan, who chairs a federal auto-safety advisory committee, suggests a federal insurance system modeled on workmen's compensation, with awards made strictly on the basis of loss rather than fault. "Financing such a system," he argues, "might be the easiest part of all." Some $3.4 billion a year in gasoline taxes is already being spent to build the Interstate Highway System. When the system is finished in 1973, Moynihan would simply raise the gas tax a penny or so a gallon...