Why Do We Have Mandatory Auto Insurance

The term compulsory automobile insurance, unfortunately, is subject to several interpretations and this fact has resulted in no end of confusion. It is easily conceivable that the motorist might be required by law to insure his car against fire, theft, collision, earthquake, glass breaking, etc., But such types of insurance all apply to the car as such, and are not directly related to the problem which arises when the owner or operator of a car injures or kills some other person or persons.

Therefore the controversy centers about the meaning of the words "liability" and "compensation." In certain respects these two types of insurance are diametrically opposed to each other. Especially this is true from the viewpoint of the injured person attempting to get monetary remuneration. His chance of success differs greatly in respect to these two varieties of insurance.

If we disregard for the moment certain exceptions and qualifications, we may say that mandatory compensation insurance means that each car owner would be required to pay an annual premium to either an insurance company or to a state fund for the purpose of paying benefits to victims of auto accidents, or to their dependents in case of death.

The question of fault would be raised only incidentally, if at all, the courts having nothing to do with the case; and with few exceptions, the injured person would be certain of receiving compensation based upon a prescribed table of benefits. An automobile compensation commission would consider the facts in each case, as does an industrial commission in connection with workmen's compensation, and would make awards accordingly.

Thus the whole question of fault would be disregarded, largely on the twofold assumption that fault is difficult to determine in motor accidents and that such accidents, no matter whose fault they are, create social problems of dependency which can best be met by motorists as a group.

Compulsory auto liability insurance, unlike car compensation insurance, is based upon the common law of negligence and the doctrine of personal fault. Each car owner is required to purchase a liability insurance policy as a prerequisite to obtaining a license. If the injured person or his representatives can obtain a court verdict for "damages," the organization with which the driver is insured is responsible for paying the bill within the limits prescribed in the insurance policy. The motorist is thus protected within the limits of the policy.

Outside of a few inconveniences he is just as well off as if no accident had occurred, providing the court does not render a verdict in excess of the amount covered by the insurance. The injured person, to obtain remuneration, must win his case in the courts. This involves proving that he contributed nothing to the cause of the accident, and that the driver alone was one hundred per cent at fault. It has been estimated that in probably two-thirds of all injury cases the plaintiff is unable to prove this and thus can obtain no remuneration by resort to the courts.

The public at large draws little or no distinction between the compensation and liability principles of auto insurance, despite the basic differences. Some newspaper editorials, magazine articles and pamphlets make the same error. Even legislators are confused by the two principles. The average person, unacquainted with the meaning of insurance terms, in approving mandatory insurance thinks he is approving a plan by which all of the victims of motor accidents receive compensation. The term, liability insurance, is often used when the speaker is actually thinking of compensation insurance. Members of the insurance profession and others have attempted to clear up this difficulty but the misunderstanding still persists in most minds.

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