Increasing costs of Car Insurance
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Alone, auto insurers are incapable of deciding what is the best solution to the problem of soaring insurance rates. A joint effort by motorists, the insurance industry, and the government is needed to tackle such a problem. Given this broad overview of the auto-insurance mess, I will present relevant material needed to find a practical and most importantly, an efficient solution to the problem of increasing costs. At first, I will discuss the problem of accidents and how to deter such a destructive habit and its associated costs. According to Guido Calabresi, author of Costs of Accidents. "the most effective way to deter accident-prone behavior is· to include all of the costs and then let the individual consumer decide if they prefer such a costly operation." Among these costs are the related opportunity costs that an individual must confront if he/she is involved in an accident. They may have to make outlays for medical expenses, impair his/her earning capacity and cause pain and suffering. As legal scholar Richard Posner points out," all three kinds of loss are economic in that they impose opportunity costs"(Posner 144). For 2 example, a victim who is no longer able to work loses at a cost equal to the net income that he would have received for his labor. Next, the history of the negligence standard will be presented and then applied to the case of the automobile accident. Moreover, the paper will present the weaknesses of the negligence(fault) system when it deals with compensating the accident victim. Afterwards, it will describe the history of no-fault legislation beginning with the Columbia Report. Finally, the paper will go on to describe the possible solutions, if any exist, to solve the auto-insurance mess through the reduction of accidents and also, by the type of insurance the individual motorist carries, mainly no-fault.When driving an automobile people can rarely avoid an accident in their lifetime, whether they are at fault or not. Three-fourths of those who drive will have an accident within the next five years(Tobias 182). Even if they take a reasonable amount of caution, there are other drivers on the road to worry about. As Patricia Paul experienced while recovering from her almost near fatal accident: accidents can happen at any time and have severe economic repercussions. She went through three years of intensive rehabilitation and hospital care and during this time could not work which all amounted to tremendous expenses(Paulson 49). If it wasn't for her no-fault car insurance, a speedy recovery would not have been possible. As she describes it: "It was a lifesaver." Not all systems are as efficient when compensating individuals for their losses, therefore the history of automobile accidents and the different ways of compensating the victim through different automobile insurance laws will be presented throughout this paper.