The Effect of No-Fault Auto Insurance on Driver Behavior and Auto Accidents in the United States

Abstract

Proponents of no-fault auto insurance claim the system delivers speedier and more equitable compensation at lower cost than traditional tort insurance (e.g., O’Connell, et al., 1996). A similar case is made in favor of choice auto insurance (Carroll and Abrahamse, 1999). However, the essential property of no-fault and choice auto insurance that proponents argue may reduce auto insurance costs restricted third-party liability is considered to be among its greatest weaknesses by opponents. Opponents commonly focus their case against no-fault and choice on the basis that individuals should be held accountable for their negligent actions (e.g., Kabler, 1999). This, they argue, provides redress for those injured and, importantly, serves to deter negligent actions overall. No-fault insurance, they reason, significantly weakens this deterrent effect, leading to more negligent driving, higher accidents rates, and ultimately higher auto insurance costs.