Don't be misled by the headlines saying the D.C. Council has approved a compromise no-fault auto insurance bill. What really happened Tuesday is that the council gave tentative approval to a travesty, a charade, a Christmas tree whose ornaments are time bombs. Naturally they did it all for you. If you happen to be a trial lawyer, that is.
Easy, now. Some of my dear friends and favorite neighbors are trial lawyers. But like other friends and neighbors of mine, they tend to look after their own interests. In the case of the D.C. insurance legislation, their interests aren't mine. I want insurance protection; they want business.
Take a close look at that lovely "compromise" they lobbied through this week and see what it does for your interests. The compromise removes sex as a basis for establishing rates. Progress for women's rights? Not quite. The break that women get (because, statistically, they are safer drivers) would evaporate. Geico, the area's major auto insurer, wrote a letter to the council in which it suggested that rates for "good drivers" would be reduced by no-fault legislation along the lines proposed by Council Chairman Arrington Dixon. The council, after wrecking the original proposal, then moved to lock Geico and other insurers into the lower rates for three years. After that, prior approval by the insurance commissioner would be required before rates could be raised. Geico says it would have to raise its rates approximately $200 a year to meet the provisions of the council proposal.
The major damage, however, was in the reduction to $2,500 of the amount of medical costs accident victims must incur before they can sue for additional "pain and suffering" awards. That, really, is the heart of no- fault. The idea is to do away with the necessity of establishing guilt. You get hurt in an accident, and you get paid for your medical costs (up to $125,000 under ter who caused the accident. Because the system saves the cost of litigation (both to you and to your insurance carrier) you pay less for the coverage.
That's the plus side. The negative side is that you give up your right to sue for additional compensation for "pain and suffering." Enter the threshold. If your medical costs reach a certain point, you are free to sue for whatever you can get. The higher the threshold, the smaller the likelihood of a lawsuit and the lower your premiums. The lower the threshold, the greater the prospect of a suit and the higher the premiums. Put the threshold low enough, and what you have is a very costly system of insurance.
The ideal, says consumer advocate Archie Richardson of the Automobile Owners Action Council, is the so-called "verbal threshold," such as Florida now has. Instead of letting the right to sue be triggered by a fixed dollar amount, the Florida law authorizes suits in the case of "substantial permanent scarring or disfigurement, or substantial and medically demonstrable permanent impairment." Dixon would settle for a threshold of between $7,500 and $10,000. Negligence lawyers, naturally, would like a threshold of zero: the freedom to sue for the "pain and suffering" brought on by the merest fender-bender.
They say they want it for you, the consumer. But you might ask yourself why some of these lawyers who never worked on other consumer issues are pulling out all the stops on this one. It can't be to save you money. The bill, as drafted, will cost you more than even the present anachronistic system that finds the District with no mandatory auto insurance of any kind.
The matter will come up again soon, at which time, Dixon predicts, one of three things will happen: no- fault will be abandoned altogether; the threshold will be lowered even further, which amounts to the same thing, or the threshold will be raised to the point where premiums will become reasonable.
The present proposal isn't no-fault. It's no good.