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Does the bill take away the right of accident victims to sue to recover damages?  No.  Motorists who elect not to choose the new PIP system become TMC insureds.  They will be able to sue each other just as they currently do, for both economic loss and pain and suffering.  Those who elect the PIP system would agree not to sue for pain and suffering and in most cases and would be immune from such suits.   However, if their medical bills and lost wages exceeded  the amount of their guaranteed benefits coverage, they could sue an at-fault PIP or TMC driver for such additional uncompensated economic loss.  TMC insureds can sue PIP drivers on a fault basis for any uncompensated economic loss.  Further, any person could sue or be sued for pain and suffering in cases involving injuries caused by a driver’s drug or alcohol abuse, or intentional misconduct.

How would seriously injured people be treated under Auto Choice?  Seriously injured people would, on average, receive better benefits than they receive today, when they recover less than 50  percent of their economic loss.  Under Auto Choice, seriously injured people would fare better because they would have two pots of benefits from which to recover -- their PIP benefits and a lawsuit for uncompensated economic loss.   People choosing the minimum benefit level would, on average, receive more benefits -- at  half the cost.  People electing PIP coverage could, alternatively, forego the cost savings and purchase guaranteed PIP benefits coverage of approximately $200,000 for every family member.

Does the Auto Choice Reform Act reward bad drivers?   No. Under Auto Choice, unsafe driving would result in the same consequences as it does  today – higher premiums.   Bad drivers would still cost insurers more than good ones and insurers would have the same incentives to penalize them for their driving. 

Would auto insurers pass the premium savings on to motorists?  Yes. The legislation states that Auto Choice would not take effect in any state where consumers will not realize at least a 30 percent savings on their bodily injury premiums.   Experience in three states that offer a choice today shows that the premium for the PIP option is about half that of the traditional system option.  Insurance commissioners would continue to regulate rates and motorists would be free to reject the PIP option if the savings do not materialize.

Is this another no-fault bill?  No. Twelve states have no-fault laws today that pay benefits to injured people, regardless of how the accident occurred.  All of these laws pay all injured people promptly and assure better compensation for serious injuries. However, largely due
to lobbying by attorneys who benefit from the current liability system, the restrictions on lawsuits in the state no-fault laws have been weakened to the point that many do not control costs. The Auto Choice Reform Act would rely far less on litigation.  By permitting those who choose the PIP option to sue only for uncompensated medical bills and lost wages, Auto Choice would control costs where current state laws do not.

Would the Auto Choice Reform Act undermine principles of federalism?  No.  Auto Choice would place more power in the hands of individuals. Today, in all but 3 states, drivers can buy only one type of insurance. Under Auto Choice, drivers in all 50 states would have a new option, PIP. Those electing the PIP option would be able to choose the level of benefits that best fits the needs of their families. Each state would have the final say as to whether Auto Choice takes effect in that state, and would retain full regulatory authority over insurance.

If you have questions about the Auto Choice Reform Act, please contact
pkinzler@cox.net