Disadvantages Of No Fault Car Insurance

The costly results of today's insurance claims have led to a more common practice of what's called no fault car insurance, where a driver's own insurer will pay a claim rather than passing it on to the at-fault driver. This may sound great, but in reality, there are some specific disadvantages to passing along insurance costs in this way. Here are a few downsides to no-fault car insurance.

Insurer tricks - Many responsible drivers who have submitted claims to their insurers in the past know how difficult it can be to get payment for a legitimate claim. The problem is that for-profit companies do not want to have to pay out money, and will go to great lengths to avoid paying on claims. That means that in many cases where a traditional claim would have been paid by a third party, it is now between a driver and his or her own insurer.

No punishment for at-fault drivers - Critics of no-fault car insurance point out that it also does not provide a lot of consequences for the drivers who cause the accidents. Instead of having to pay through the courts, drivers receive higher premiums and a greater risk assessment, but some argue these are not enough to bring home the reality to drivers who may not be as responsible as others.

Vague medical provisions - Some also argue that no-fault insurance situations do not lay out enough details for the medical side of a claim, and that some victims who seek medical attention too quickly can find out that this caused a negative outcome for the claim.

Padding the claim - Knowing that it's a large insurer who is liable to pay the claim rather than an individual driver, many questionable doctors, body shops, and others involved in delivering services can tend to pad the claim. It attaches more cost to an already greater cost than the system, and creates higher rates for insured drivers.

Lost wages - For elements such as lost wages, insurers may only pay up to the specific amounts outlined in a policy. Where an at-fault driver would have been liable for the entire amount in traditional situations where these payments were handled through the courts.

Not effective - There are also many who say that the new no-fault insurance provisions do not really stop drivers from seeking compensation through the courts and holding the at-fault driver responsible. This can lead to a kind of patchwork process where a lot of chaos is thrown into the mix, and drivers often get confused as to how to pursue compensation for a claim when they were not at fault.

Think about these kinds of issues when you sign on to policies that pay claims through a no fault insurance system.