In its widest sense, “no-fault insurance” is a term used to describe any auto insurance coverage under which policyholders are paid for personal injuries and property damage they sustain in accidents through their own insurance company, regardless of fault. Not only is no-fault confusing and dysfunctional, it also contradicts basic American principles such as individual responsibility and accountability. By eliminating “fault”, the law treats good drivers and bad drivers the same. This weakens the deterrent effect of tort law. It also eliminates full compensation. In an effort to avoid the abuse of claims for pain and suffering and other non-economic damages, the experiment has thrown the baby out with the bathwater.
Good first-party claims practice requires prompt repair of damaged vehicles. Cost-conscious and profit-minded auto insurers aggressively pursue subrogation upon being notified of a physical damage claim. They provide carriers for culpable tortfeasors with police reports, witness statements, and evidence of the claims damages they have paid. With increasing frequency, liability carriers are refusing to take such damage “evidence” at face value. Instead of simply paying the claim, they are arguing that promptly repairing the vehicle without giving them the opportunity to inspect and verify the damages is tantamount to spoliation and is a defense to the claim against them. But are such claims of “spoliation” legitimate?
In most states, laws and regulations governing subrogation and/or reimbursement rights of a workers’ comp carrier and its insured are virtually non-existent. Insurer claims for reimbursement from their insured and disputes over who gets reimbursed what, when there is a successful subrogation recovery, often hinge upon the parties’ rights under the policy. Because carriers file their individual deductible program with each state, no two are alike, and these agreements become very important in determining recovery rights.