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In the 1930s, academics examining the nation's developing auto insurance system
suggested a no-fault system.
Their aim was to achieve rapid and full compensation of auto accident claims without
litigation.
They suggested leaving the solving of disputes through litigation, to a system, allowing
private insurance companies to settle all claims. Under this new Idea, individuals injured
in auto accidents would be compensated by their own insurance company, regardless of who
was at fault.
Compensation for non-economic damages.
(Example: pain and suffering, disfigurement,
loss of limbs etc) experienced by a human being would be prohibited.
The concept went dormant until 1965 when it was refined to a limited no-fault system
applied only to minor auto accidents. Anyone injured in such an automobile collision would
receive compensation for medical bills and wage loss, regardless of whether he had caused
the accident.
However, compensation for non-economic damages, known commonly as "pain and
suffering," would be prohibited in all but the most severe accidents.
Only accident victims with serious injuries those meeting a certain dollar amount, usually
$5000 and up, of non-economic damage could seek damages in court to recover medical
expenses and other economic costs that exceeded the no-fault benefits. .
In 1974, with the considerable resources of the insurance industry in support, nineteen
states had enacted some form of limited no-fault Insurance.
Massachusetts was first in 1971.
Twenty-four states adopted no-fault laws to start with.
No-Fault laws were not uniform from state to state.
Sixteen states set up a mandatory no-fault system.
In mandatory no-fault states, lawsuits seeking compensation for human pain and suffering
are permitted for injuries meeting a certain threshold, the definition of which may vary
considerably from state to state.
Monetary threshold states require the victim to prove that his damages exceed a specific
dollar amount in order to access the courts to obtain pain and suffering damages.
Verbal thresholds states permit lawsuits only if the injured party can demonstrate a high
level of injury, such as serious and permanent.
Eight states utilize hybrid systems, in which "no-fault" coverage supplements
the required third party liability insurance. In these "add-on" states, there
are no limits on lawsuits.
All present no-fault systems permit recourse to the courts against at-fault drivers for
payment of economic losses in excess of the no-fault benefits.
No state has adopted a "pure" no-fault system, which completely bars access to
the court system.
In 1976, no-fault's progress came to a halt.
Only the District of Columbia has adopted a no-fault law since 1976.
Since 1976 six states have repealed their mandatory no-fault laws.
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