Colorado Dropping No-Fault Insurance

By Gary Mogel

NU Online News Service, May 9, 2:37 p.m. EDT?Colorado has enacted legislation that will end its no-fault system for automobile injury compensation.

Effective July 1, a tort system will go into effect where injured parties have an automatic right to sue for damages. The measure that was signed into law on May 2 by Republican Gov. Bill Owens (H.B. 1188) eliminates a no-fault system that insurers said was too expensive due to overly generous benefits and threshold injury level requirements that were too low to prevent lawsuits seeking additional damages.

Under no-fault, each driver's auto insurance coverage pays for their injury no matter who is judged at fault. The aim of such programs is to reduce litigation.

"Medical costs and premiums were high in part because of the wide range of health care providers, which included aroma therapists and faith healers," noted Jeff Brewer, a spokesperson for the Des Plaines, Ill.-based National Association of Independent Insurers, which backed the tort bill.

Drivers in Colorado pay the eleventh-highest auto insurance rates in the U.S., and the average no-fault premium increased 80 percent over the past two years, according to the NAII. The revised law is expected to result in premium savings of approximately $176 per vehicle.

Colorado's effort to revise its automobile injury compensation system had originally taken the form of a bill designed to change flaws in the no-fault system, according to Michael Harrold, NAII's senior director, state government affairs.

He said legislators developed the tort legislation after deciding the no-fault system was beyond saving

"The no-fault system had become so amended and diluted over time that it could not be reformed," said Mr. Harrold. "Too many had stakes in it; there were too many hands in the honeypot." He mentioned trial lawyers, chiropractors and massage therapists as among those with "stakes" in the no-fault system.

Mr. Harrold does not see a general trend in the states to abandon automobile no-fault in favor of a tort system. He pointed out that Colorado had serious flaws in its particular system for compensating auto injuries that needed to be addressed.

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Colorado Dropping No-Fault Insurance

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