DOCUMENT RESUME ED 068 845 The Consumer Looks at ...DOCUMENT RESUME ED 068 845 AC 012 997 TITLE The...

DOCUMENT RESUME

ED 068 845 AC 012 997

TITLE The Consumer Looks at His Automobile Insurance.INSTITUTION New York State Education Dept., Albany. Bureau of

Secondary Curriculum Development.PUB DATE 72NOTE 78p.

EDRS PRICE MF-$0.65 HC-$3.29DESCRIPTORS Bibliographies; *Consumer Education; *Curriculum

Guides; *High School Curriculum; High Schools; HighSchool Students; Insurance Companies; *InsurancePrograms; Program Descriptions; Teaching Guides;Young Adults

ABSTRACTThis publication on the hows and whys of automobile

insurance is designed as a module for one of a series of consumereducation courses in New York high schools. The course is planned tohelp students understand how the insurance system works, the costsinvolved, proposed legislation, and changes in automobile design.After completing the course the student should understand theautomobile insurance program and be able to select insurance based oninformed opinion. This course guide offers suggested pupil andteacher activities based on understandings to be gained. Charts ofexisting and proposed insurance systems are included, as arebibliographies of books, pamphlets, and periodicals. (RS)

U.S. DEPARTMENT OF HEALTH.EDUCATION & WELFAREOFFICE OF EDUCATION

THIS DOCUMENT HAS SEEN REPRO-DUCED EXACTLY AS RECEIVED FROMTHE PERSON OR ORGANIZATION ORIGINATING IT POINTS OF VIEW OR OPIN-IONS STATED 00 NOT NECESSARILYREPRESENT OFFICIAL OFFICE OF EDU-CATION POSITION OR POLICY

THE CONSUMER one of a series for expanded program

CONSUMER EDUCATION

n

LOOKS AT HIS AUTOMOBILEINSUR NCE

/..041/// /.

FILMED FROM BEST AVAILABLE COPY

The University of the State of New YorkTHE STATE EDUCATION DEPARTMENTBureau of Secondary Curriculum DevelopmentAlbany, New York 122241372

THE CONSUMER LOOKS AT HIS AUTOMOBILE INSURANCE

One of a series in Exbanded Programs of Consumer Education

Automobile insurance is increasingly costlywith higher cost for judgments, claim settlements, and repairs.

PRINTED THROUGH THE USE OF ESEA TITLE I FUNDS

The University of the State of New York/The State Education DepartmentBureau of Secondary Curriculum Development/Albany/1972

THE UNIVERSITY OF THE STATE OF NEW YORK

Regents of the University (with years when terms expire)

1984 Joseph W. McGovern, A.B., J.D., L.H.D., LL.D., D.C.L.,Chancellor New York

1985 Everett J. Penny, B.C.S., D.C.S.,Vice Chancellor White Plains

1978 Alexander J. Allan, Jr., LL.D., Litt.D. Troy

1973 Charles W. Millard, Jr., A.B., LL.D., L.H.D. Buffalo

1987 Carl H. Pforzheimer, Jr., A.B., M.B.A., D.C.S., H.H.D. Purchase

1975 Edward M. M. Warburg, B.S., L.H.D. New York

1977 Joseph T. King, LL.B. Queens

1974 Joseph C. Indelicato, M.D. Brooklyn

1976 Mrs. Helen B. Power, A.B., Litt.D., L.H.D., LL.D. Rochester

1979 Francis W. McGinley, B.S., J.D., LL.D. Glens Falls

1980 Max J. Rubin, LL.B., L.H.D. New York

1986 Kenneth B. Clark, A.B., M.S., Ph.D., LL.D., L.H.D., Hastings on

D.Sc. Hudson

1982 Stephen K. Bailey, A.B., B.A., M.A., Ph.D., LL.D. Syracuse

1983 Harold E. Newcomb, B.A. Owego

1981 Theodore M. Black, A.B., Litt.D. Sands Point

President of the University and Commissioner of EducationEwald B. Nyquist

Executive Deputy Commissioner of EducationGordon M. Ambach

Deputy Commissioner for Elementary, Secondary, and Continuing EducationThomas D. Sheldon

Associate Commissioner for Instructional Services

Assistant Commissioner for Instructional Smicus (General Education)Bernard F. Haake

Director, Division of School SupervisionGordon E. Van Hooft

Chief, Bureau of Secondary Curriculum Development

3

FOREWORD

In 1967, the State Education Department published "ConsumerEducation Materials for an Elective Course." This material has sincebeen introduced into more than 500 of the New York State high schools.As a result of the interest in Consumer Education in the State andNation the Department has begun the preparation of a series of modulesExpanded Programs of Consumer Education. This module, The Consumer Looksat His Automobile Insurance, is the sixth to be produced. Those alreadydistributed are:

of:

Consumer Issues and ActionEducation and the ConsumerThe Consumer and RecreationConsumer Problems of the PoorThe Consumer and His Health Dollar

It is expected that other modules will be produced in the fields

Beauty Products and the ConsumerThe Consumer and His Tax DollarThe Consumer and Transportation

Nothing touches the lives of the disadvantaged more than the constantstruggle to stretch limited financial resources to meet the increasingcosts of living. This module is designed in the hope that it will helpthe poor to make better use of their income, as well as with the expectationthat those of higher income will be more understanding of the problems oftheir fellow citizens.

Unlike the original syllabus, where 12 units covering various phasesof Consumer Education were bound together, the modules in Expanded Programsof Consumer Education are being prepared as separate publications toprovide greater flexibility. Each of the nine modules in the series maybe used as a discrete unit, or with other units in the series. The ninemodules may be presented as a semester or part of a semester course, orpresented in conjunction with the original syllabus which covers such areasas the purchase of food; shelter; appliances; automobiles; and a considera-tion of credit; money management; fraud, quackery, and deception; bankingand savings; life and health insurance;-security programs; and consumer law.

It is hoped that the presentation of the modules as separate publica-tions will tend toward flexibility in their use as mini-courses in suchfields as social studies, business education, home economics, industrialarts, agriculture, and other areas of the curriculum.

The suggestions to the teacher found in "Consumer Education Materialsfor an Elective Course," pages 1-4, apply equally to each of these modules.The reaction and suggestions of those using these materials in the fieldwill be helpful to the Department in planning further materials for ConsumerEducation and in making necessary revisions of the material.

iii

The original material for this module was developed and written by

Robert E. Colton, business education teacher, Hauppauge High School.

Hillis K. Idleman, associate in secondary curriculum development, revised

the material, made some additions, and prepared the module for publication.

The Department acknowledges with appreciation the suggestions of all

those who reviewed the manuscript and in particular the following who made

substantial contributions:

Martin Rosen, chairman, Consumer Education Committee, New York State

Council on Economic Education, Farmingdale High School

Fabian Englander, member, Consumer Education Committee, New York State

Council on Economic Education, Nyack High School

Members of the staff of the staff of the State of New York Insurance

Department (See the statement of Superintendent Benjamin R. Schenck

concerning automobile insurance reform on facing page.)

Gordon E. Van HooftDirector, Division ofSchool Supervision

iv

BENJAMIN R.SCHENCKSUPCRINTCNOCNT Of INSURANCC

STATE OF NEW YORK

INSURANCE DEPARTMENT123 WILLIAM STREET

NEW YORK 10038

May 26, 19 72

Mr. Hillis K. Idleman, AssociateBureau of Secondary Curriculum DevelopmentThe .University of the State of New YorkThe State Education DepartmentAlbany, New, York .12224

Dear Mr. Idleman:

I would like to compliment the Bureau of SecondaryCurriculum Development on its excellent job of preparing The_Consumer Looks At His.Automobile Insurance.

Automobile insurance reform is one of the primaryconsumer issues in the. country. We believe that through thepassage of meaningful no-fault automobile insurance laws,hundreds of millions of dollars in insurance premiums could besaved annually. Not only would the consumer receive this saving,but he would get a far better value for the premium dollar he doesspend.

Sincerely yours,

Superint dent of Insurance

CONTENTSPage

Foreword iii

Introduction 1

What Are the Causes of the Widespread Dissatisfaction WithPresent Practices in the Automobile Insurance Industry? . . . 3

What Are the Sources of Automobile Insurance? 8

Why Is It Important to Choose an Automobile InsuranceCompany With Care? 8

How Are My Rates Determined? 10

What Are the Different Kinds of Automobile Insurance WhichCan be Purchased? 16

Why Is Our Present System of Insurance Called the "Fault"System? 27

What Are the Major Criticisms of the Fault System? 31

Why Have Cancellations and Nonrenewals of AutomobileInsurance Increased? 44

What Has Been the Effect of Spiraling Automobile InsuranceCosts? 46

What Are Some of the Criteria for Effective Auto InsuranceReform? 47

What Is No Fault Insurance? 52

What Is the History of No Fault Insurance? 54

Why Is It Important That Students Understand and Take aPosition on No Fault Insurance? 55

What Are the Objections to No Fault Insurance? 57

Is No Fault An Answer to Automobile Insurance Reform? 65

What Happened to No Fault Legislation in the 1972 Session? . . 65

Summary 67

Bibliography 68

INTRODUCTION

THE CONSUMER LOOKS AT HIS AUTOMOBILE INSURANCE

Automobile insurance is one of the prime areas of consumer dissatis-faction today. It touches nearly everybody's pocketbook, whether he ownsor rents a car.

One of the most controversial issues in the 1971-72 session of theNew York State Legislature was that of "no fault" insurance. The debatecontinued for months. Lengthy hearings were held by the Insurancecommittee. Newspapers featured stories and printed editorials on thecontroversy. In general the press, the public, consumer interest groups,and some of the companies handling automobile insurance favored one typeor another of no fault insurance.

On the other side of the controversy were some of the automobileinsurance companies and many representatives of the legal fratdrnity. Thismodule will deal with the issues involved in the debate and will attemptto present the viewpoints of those on both sides of the conflict.

With the increasing number of cars on the road, the continuing toll ofinjuries, fatalities, and collisions, and the mounting auto theft rate,auto insurance premiums have become almost prohibitively expensive,especially in urban areas. Although the "good risk" has a choice ofinsurance companies, the poor risk often cannot obtain insurance at anycost. A further problem is that, when an accident occurs, settlement isoften delayed for long periods because of the backlog of cases on thecourt calendar. When settlement is finally reached, too often it is unfair,either overpaying or underpaying the claimant. The final blow is that sucha large part of any settlement goes to pay court costs and attorneys'fees.

For these reasons the majority of people are dissatisfied with theway automobile insurance is handled today. Insurance companies, however,contend that the premiums must increase if they are to continue to make aprofit. Thus the problem will grow worse instead of better unless somefundamental changes are made.

The Government - and part of the industry itself - has recognizedthe need for reform, and wants to make insurance do a better job for theconsumer (and for the general public).

Transportation Secretary, John A. Volpe, in an address before theAmerican Bar Association, July 1971, said, "The present system ill servesthe accident victim, the insuring public and society at large. It isbasically inefficient, expensive, incomplete, and slow. It allocatesbenefits poorly and unevenly. It discourages the use of rehabilitativetechniques. It overburdens the courts and the legal system. Both on thebasis and the logic of its operation, it does little if anything to mini-mize crash losses."

1

rkb

With the understanding that what Secretary Volpe said is true, obviouslyautomobile insurance is not accomplishing its prime purpose - to serve the

purchaser of auto insurance, the accident victim, and citizens generally.In such a situation, can the consumer afford not to ask questions and in-

vestigate other possibilities for improvement of a situation that affects his

economic and social and personal well-being? By his active participation and

through his elected representatives, the consumer seeks a system which will

be fair to the insured, to the insurers, and to the public who may suffer

loss.

Students, as present and future consumers of auto insurance, have a need

to know how our present system works, what they are protected against, the

inequities of the present system, the costs involved, what changes are being

proposed, how these changes will affect them, and what the major provisions

of these new proposals are. They then must decide whether changes are

necessary on a state basis or an all-encompassing Federal level.

Similarly, students should become aware of recent and proposed improve-

ments in automobile design, and how these changes will affect them as car

owners, as well as the effect safer cars will have on insurance costs. They

should learn both how to shop for automobile insurance and how to bring

about desirable changes in the insurance system.

Finally, students should understand that their Government at all levels

shares the consumers' concern, and what steps their Government is taking to

improve the situation.

Newspaper articles and periodicals such as Consumer Reports and

Changing Times offer an excellent opportunity to keep up to date in this

dynamic consumer field. Students should also check current issues of such

periodicals as National Dragster, Hot Rod, Popular Mechanics, Mechanix

Illustrated, Motor Trend, and Popular Science. In addition, they should

be encouraged to read "Automobile Insurance ... For Whose Benefit?" - A

Report by the New York State Insurance Department to Governor Nelson A.

Rockefeller (1970), and other reference material dealing with auto insurance.

As a result of the study of this module,students should:

. understand how the present automobile insurance program developed and

the unsolved problems inherent in the present system

. exercise choice, based on informed opinion, in the selection of their

automobile insurance

. know the criteria for a system that is more nearly just and equitable

for all

. be sufficiently acquainted with the proposals for change so that

they can intelligently discuss and decide their value

. be able to state the advantages that proponents claim for the

no fault proposal

. be able to state the objections that are advanced by the opponents

of no fault insurance

. be familiar with effective ways to make their views known to those

who make policy determinations resulting in legislation at both

the State and Federal level

9 2

SUGGESTED PUPIL ANDUNDERSTANDINGS TEACHER ACTIVITIES

WHAT ARE THE CAUSESOF THE WIDESPREADDISSATISFACTION

WITH PRESENT PRACTICESIN THE AUTOMOBILEINSURANCE INDUSTRY?

. Show filmstrip "Automo-bile Insurance," detail-ing the need for pro-tection and coverages.

. Have any of the studentsbeen refused automobileinsurance through normalchannels?

. Have the students' fami-lies been refused?

. Have rates been raisedafter a claim?

. Was the rate rise justi-fied?

. Have the students feltthey were treated unjust-ly when a claim was made?If so, what were thecircumstances?

. Do the students feel itis fair to charge a teen-ager as much as $450 ayear or more for auto-mobile insurance?

3

SOURCE

. Insurance Informa-tion Institute,110 William Street,New York, N.Y.

"Automobile In-surance ... For WhoseBenefit?" A Reportto Governor Nelson A.Rockefeller by theState of New YorkInsurance Dept., 1970,p. 3

"A typical driver hasa better than evenchance of having anaccident every threeyears; just aboutevery driver will havean accident some-time. Our presenttort fault liabilitysystem for compensa-ting the victims ofautomobile accidentshas been authorita-tively criticized asslow, expensive andunfair.

"The system has re-mained essentiallyunchanged while thenation has passedfrom the horse andPliggy era to an agenominated by theautomobile - withthe highway accidentan all-too-commonoccurrence."

Perpetual motion L.I. Press, 1/19/70

(Cartoon courtesy Long Island Press,1/19/70)

UNDERSTANDINGS

SUGGESTED PUPIL ANDTEACHER ACTIVITIES

. Ask an insurance agentto discuss the prob-lems and achievementof auto insurance withthe class. Have theclass prepare questionsfor the agent to answerbased upon the problemsthey and their familieshave had getting in-surance, meeting mount-ing insurance costs, andsettling claims.

.114

SOURCE

. U.S. News & WorldReport, "Ahead: A

New System of AutoInsurance?" (inter-view with W. O. Bailey,vice president, AetnaLife & Casualty Co.,)4/28/69, p. 64:"If the Americanpeople want an effi-cient system thatspeedily compensatesevery victim of anauto accident for hiseconomic losses - andI think society in-creasingly wants just


. America has moreroads and more carson the roads thanany other countryin the world.Almost all adultAmericans drive acar for business orpleasure.

. List road mileage invarious countries andcompare these statistics .

with U.S. records. Dowe have fewer or moreinjuries and fatalitiesper mile and per car?Why might this be so?

SOURCE

that - then the nofault system is thelogical answer. It

may be some time awayyet, but a major over-haul of our existingsystem is inevitable."

. The World Almanac

. The use of the auto- . How many automobilemobile in our fatalities have occurredcountry has resulted in the students' communityin a steady inin the last year?crease in trafficdeaths - up about 50 . Make or obtain a mappercent in the past from the Police Depart-10 years: ment pinpointing the

location of each localfatality, or invite theAs claims for in-

juries and propertydamage have in-creased, as autothefts have in-creased, and costsof repairs soared,the costs of auto-mobile insurancehave likewiserisen.

local traffic safetydirector to visit theclassroom to give thisinformation.

. In how many cases wereteenage drivers in-volved?

5

Encyclopedic Almanac

State Department ofTransportation

. Local police ortraffic safety depart-ment

. Better Homes andGardens, 11/71:7ITTiason insurancecompanies have beenlosing money is thatcosts resulting fromcar accidents haveskyrocketed in recentyears. From 1962 to1969, deaths rose over38 percent, injuriesalmost 50 percent andeconomic losses jumped94 percent. (Duringthat same period, thenumber of licenseddrivers increased only16.8 percent.) Alongwith the rise inaccidents, medical,auto repair, and legalexpenses also bur-geoned. The hikes ininsurance ratesoften held down by

UNDERSTANDINGS

. The average driverwill make 200 obser-vations and 20decisions for eachmile he drives.With this manydecisions to make,even the bestdriver may be in-volved in anaccident.

. Traffic fatali-ties have becomethe third lead-ing cause ofdeath of thoseunder 35.


. List the yearly fatali-ty figures in theUnited States from1961 to 1970.

. Chart the 10 primecauses of death inthe United States.

. Debate: Educationof youthful driversand re-education ofolder drivers wouldreduce fatalities.

. Secure a copy of"Insurance Facts" from

the Insurance In-formation Institute,110 William Street,New York, N.Y., andreport on the specific

6

SOURCE

state insuranceboards just havenot been enough tocover."

. U.S. Senator PhilipA. Hart, "The CaseFor No-Fault Insur-ance," Moneysworth,110 W. 40 Street,New York, N.Y.10018, 3/8/71

. "Insurance Facts" also"Traffic AccidentExperience in theU.S.,"published bythe Insurance In-formation Institute,110 William Street,New York, N.Y.10038, 4/71, p. 5

Lazarus, Simon, "No-Fault Default," TheNew Republic, 381W. Center Street,Marion, Ohio 43302,

. World Almanac

. "Price Variabilityin the AutomobileInsurance Market -Department of Trans-portation Automobileand CompensationStudy," U.S. Govern-ment Printing Office,1970, p. 233:"The term high riskdriver, used heremeans a driver whooperates his

MIMPEM:=.111'.


. Along with trafficfatalities, economicloss has also beenincreasing. Themore severe theaccident, thegreater the timelost in work hours.There is a $16.5billion economicloss each year.

. There is a grow-ing need forgreater protectionfor the motorist.Society mustprotect itselfagainst severeloss.

numbers of high riskdrivers by agegroups.

. Ask students to state"economic loss" interms of the number ofaverage-size homes,the number of average-size automobiles,schools, etc., thatmight be purchasedfor this amount ofmoney.

7

1.4

SOURCE

automobile reckless-ly, while drinking,at high speeds, or inany other irresponsi-ble manner."Second, high riskdrivers are morefrequently found inthe 16-25 agecategory and the 50years and oldercategory." p. 237

. "Automobile In-surance ... ForWhose Benefit?" D. 3:"At the presentmoment, automobileinjuries alone occurat a rate of 10,000per day. This is50 or more times thecasualty rate of thewar in Vietnam...Accidental-deathand disability in-deed, became, in thewords of the Na-tional Academy ofSciences, 'theneglected disease ofmodern society'."

. Parents, relatives

. Lazarus, Simon, "NoFault DefaultrtheNew Republic,4/17/71, p. 19

. Worsnop, Richard L.,"Auto InsuranceReform," EditorialResearch Reports,1735 K Street, N.W.,Washington, D.C.20006, 1/13/71, p. 32:"The fundamentalprinciple of in-surance of all kindsis the sharing of

SUGGESTED PUPIL ANDUNDERSTANDINGS TEACHER ACTIVITIES SOURCE

WHAT ARE THE SOURCESOF AUTOMOBILEINSURANCE?

. Some insurancecompanies sellinsurance throughthe mail.

. Some use agentswho work onlythrough onecompany.

. Some companiessell throughindividual agentswho may repre-sent severaldifferentcompanies.

WHY IS IT IMPORTANTTO CHOOSE AN AUTOMOBILEINSURANCE COMPANY WITHCARE?

. Have students giveexamples of how risksare shared (mountainclimbers roped together,airplane crews or foot-ball teams dependenton each other, childrenholding their mother'shands crossing astreet, policemenworking in teams oftwo, etc.)

. Poll the class to seewhat types of automobileinsurance policies areheld by their parents.How many policies arefrom mail order companies?How many are fromcompanies with localrepresentati7es?

. The most importantsingle factor ininsurance is safety,that is the assurancethat the policyprotects the insured

risks. In otherwords, many personsmake small contribu-tions - or premiums -as a safeguardagainst'severe lossor financial hardshipin the event of atraffic accident, afire or other mis-fortune."

"How to Buy Auto In-surance Today,"Changing Times, 1729H Street, N.W.,Washington, D.C.20006, 7/71, p. 6

. Make a chart showing theratio of family policiesbought through the mail,from an agent, and thosewhich are group policiessecured through the employer.

. Are the rates the samefor similar coverages?If not, what are some ofthe reasons why they arenot the same?

8


from financial loss.Thus,it is wise tobuy insurance froma company registeredin the State andunder the regulationof the State In-surance Department.

. A second factor isservice. In choosinga company one shouldseek a company thathas a good reputationfor fair and promptclaim settlement.

. Thirdsit pays toshop for automobileinsurance, as ratesmay vary for theidentical coveragein the same area.

. Finally, whethcryou wish an injivid-ual, personalresponse from anagent, or a moreimpersonal responsefrcm a company willbe one furtherfactor in determin-ing where you shopfor your insurance.

. Dramatize the need toshop for automobileinsurance by havingthe class write andparticipate in a skit,"George Shops forAuto Insurance." Basethe skit on the responsesto an identical lettersent to 10 insurancecompanies. In theletter explain that theclass is studying auto-mobile insurance andwishes to compare ratesand service. Set up ahypothetical case suchas the following:

What are the rates for10/20/5 coverage for ayoung woman, aged 19,single, employed as a

clerk/typist in a govern-ment agency who:- lives at home in

the city of Yonkers,- drives 4 miles each

day to work- does not carry

passengers for pay- has no other familymembers using thecar

9

" How to Hold On to

Your Auto Insurance,"Moneysworth, 11/30/70

. See illustration onp. 12 of a typicalapplication formupon which a companybases its rates.

. Application for rateforms from a numberof insurancecompanies

UNDERSTANDINGS

HOW ARE MY RATESDETERMINED?

. By locality

. By state

. By company,according to thecompany's loss

experience andstate controls


- drives a total of12,000 miles ayear

- seeks liabilitycoverage only

- has no recordof trafficviolations

- passed a drivertraining course

(Check several in-surance applicationforms to see iffurther informationwould be necessarybefore a quotationcould be given.)

. Secure data fromlocal agents onrate differentials forminimum coverage(10/20/5) in yourarea and surroundingareas.

. Why does the localityand the state inwhich one lives affectthe costs ofinsurance?

. How would the company'sloss experience affectrates?

. Why might the degreeof state control affectrates?

10

SOURCE

. Local agent

. "How to Buy AutoInsurance Today,"Changing Times,p. 6

. The figures 10/20/5mean that your in-surance company isliable up to$10,000 for any oneperson who is injured,and is responsibleup to $20,000 forell persons injuredin the same acci-dent. The insurancecompany will payfor damages to otherpersons' propertycaused by you up to$5,000.

eh

Examples

of

factors

taken

into

consideration

in

classifying

insurance

applicants

DIG

ES

TO

FIM

PO

RT

AN

TF

AC

TS

about

YO

UR

AU

TO

MO

BILE

INS

UR

AN

CE

AU

TO

MO

BILE

.M

UT

UA

LIN

SU

RA

NC

EC

OM

PA

NY

OF

AM

ER

ICA

FA

CT

OR

YM

UT

UA

LLIA

BILIT

YS

WA

MI

CO

MP

AN

YO

FA

ME

RIC

A

PR

IVA

TE

PA

SS

EN

GE

RR

AT

EC

LAS

SIF

ICA

TIO

N:

Since

yourlast

policyw

asissued,

theprivate

passengercar

insuranceclassifi-

cationshave

beenrevised

andexpanded

ito

includeadditional

ratingfactors.

HIG

HLIG

HT

SO

FT

HE

RE

VIS

ED

PLA

N

Unm

arriedfem

aleoperators

under25

yearsof

agenow

requirea

higherrate

thanheretofore.

butit

graduallydim

inishesuntil

age25.

andis

stillnot

ashigh

asm

aleoperators

inthe

same

agegroup.

The

premium

sfor

allyouthful

male

operatorsnow

graduallydecrease

eachyear

insteadof

remaining

atthe

same

leveluntil

age25

andthen

droppingabruptly

toan

adultrate.

Unm

arriedm

aleoperators

who

arecar

owners

ortne

principaloperators

must

paythe

graduallydecreasing

premium

seach

yearuntil

reachingage

30:if

married,

ornot

owners

orprincipal

operators.the

higherbut

decreassing

ratesapply

untilage

25.

The

Driver

Training

Credit

nowapplies

tounm

arriedfem

alesas

well

asall

male

operatorsup

tothe

ageof

21.

Afem

aleoperator

from30

through64

yearsof

agew

hois

theonly

driverin

thehousehold

isentitled

toa

premium

creditof

approximately

15':.

Unm

arriedm

alesand

females

under25

yearsof

age.not

owners

orprincipal

operators.w

hoare

residentsty-

dentsat

aschool

orcollege

overIO

Uroad

miles

fromthe

principalplace

ofgaraging

ofthe

automobile

(carnut

atschool

)are

entitledlit

areduction

inprem

ium.

Rate

differentialscontinue

foruse

classificationssuch

aspleasure,

business.com

muting

tow

ork.use

bya

farmer

oruse

bya

clergyman.

Rates

arereduced

fordrivers

age65

orolder.

The

driverm

ustbe

theprincipal

operatorof

thecar

andthe

reductiondoes

notapply

ifan

additionalcharge

hasbeen

made

fora

youthfuloperator.

The

revisedP

lannow

appliesto

Com

prehensiveF

ireand

Theft

coveragesas

well

asto

Bodily

Injury.P

ropertyD

amage.

Medical

Paym

entsand

Collision.

-A

DD

ITIO

NA

LR

AT

ING

FA

CT

S

TW

OO

RM

OR

EA

UT

OM

OB

ILES

:T

wo

orm

oreautom

obiles,ow

nedby

anindividual

orjointly

owned

byrelatives

livingin

thesam

ehousehold

andinsured

inthe

same

company,

receivea

creditof

approximately

15%IP

;in

New

York

City

area1

oneach

car.If

ratedhigh

fora

youngoperator,

areduction

stillapplies.

Youthful

Operators

Ifthere

aretw

oor

more

auto-m

obilesin

thesam

ehousehold

andthere

areone

orm

orem

aleoperators

under30

yearsof

age.or

females

under25.

thehigher

ratefor

youthfuloperators

appliesonly

tothe

number

ofautom

obilesequal

tothe

.cumber

ofsuch

operators.

SA

FE

DR

IVE

RIN

SU

RA

NC

EP

LAN

:T

heintent

ofthis

planis

torew

ardthe

driverw

iththe

unblemished

drivingrecord.

Under

theS

afeD

riverInsurance

Plan

thebasic

ratesarc

increasedvarious

percentagesunder

apoint

sys-tem

foraccidents

andcertain

motor

vehicleconvictions

thatoccur

duringa

threeyear

period.F

orinstance,

fora

singlecar

owner.

thism

otlificationto

thebasic

ratevaries

fromzero

forthe

driverw

ithno

Safe

Driver

pointsagainst

hisrecord,

to180'

furthe

driverw

itha

maxim

umof

fourpoints.

MILIT

AR

YS

ER

VIC

E:

An

indisidua!in

activem

ilitaryservice

with

thearm

edforces

ofthe

United

States

ofA

merica

shaltnot

heconsidered

aresident

ofthe

insured'shousehold

forrating

purposes.unless

suchindividual

customarily

operatesthe

automobile.

AP

PR

OV

ED

DR

IVE

RT

RA

ININ

GC

RE

DIT

:P

rivatepassenger

automobiles

drivenby

operatorsunder

21years

ofage

receivea

creditw

heresatisfactory

evidenceis

pre-sented

thatoperators

under21

yearsresident

inthe

insured'shousehold

havesuccessfully

completed

adriver

trainingcourse

sponsoredand

approvedby

competent

edu-cational

authoritiesand

conductedby

acertified

instructor.

The

periodof

instructionshall

consistof

atleast

thirtyhours

ofclassroom

studyand

sixhours

actualdriving

experience,or

thirtyhours

ofclassroom

study.three

hoursactual

drivingexperience

andtw

elvehours

inan

approveddevice

which

simulates

practicedriving.

CLE

RG

YM

EN

:A

utomobiles

owned

byclergym

enare

notconsidered

usedfor

businessor

asbeing

drivento

orfrom

work.

FA

RM

ER

S:

Areduction

isapplicable

ifthe

automobile

isprincipally

garagedon

afarm

orranch

andis

notused

inany

occupationother

thanfarm

ing.

IMP

OR

TA

NT

,E

veryitem

onthe

questionnaireenclosed

with

thism

ailingis

necessaryin

thedeterm

inationof

thesor-

.reel

premium

chargesunder

thenew

Plan.

Itis.

therefore.essential

thatyou

answer

eachquestion

carefullyand

returnthe

formto

usprom

ptly.

SUGGESTED PUPIL AND

UNDERSTANDINGS TEACHER ACTIVITIES

. Other factors arealso considered:- How the car is

being used --

for business,for pleasure,for farm work.

- AgeTeenagers areconsideredpoorer risksthan olderdrivers.

- SexSome companiesgive lower ratesfor femaledrivers andfurther breakdown the ratesto give a pre-ferred statusto women 30 to

. Have the information ob-tained from insuranceagents include differencesin premium costs becauseof

- sex

- age

- driver training- use of car- driving record

. Compare the informationobtained with parents'policies for the samecoverage.

. Have students make charts . Local

showing the ratio of busi-ness-to-pleasure use ofparents' cars.

. Why are rates higher forthose who use their carsin business?

. Why are rates lower forfarmers?

. Debate: Teenage boysare poorer automobileinsurance risks thanteenage girls.

. Some companies thatoriginally charged morefor drivers over 64years of age havesince lowered rates forthe older drivers. Whymight this be so?

. Why might insurancerates be lower forfemales than for males?for females from 26 to64 as contrasted tofemales under 26?

12

SOURCE

agent

. Local agent

. Prial, Frank J.,"Cars Called Youths'Biggest Peril," NewYork Times, 9/1977:The study by theNational Transporta-tion Safety Boardsays: 'Thousandsmore 15- to 24-year-old drivers thantheir proportionalshare of all driversare dying on Americanhighways each year.'"

UNDERSTANDINGS

64 over thoseolder or

younger thanthis group.

- OccupationRates maydiffer fordifferentoccupationalgroups.

p.


. From "Insurance Facts"gather information toreveal the dispropor-tionately high numberof young drivers in-volved in automobileaccidents.

. List categories orgroups of drivers otherthan teenagers whom in-surance companies mayconsider poor risks.Why are they consideredpoor risks?- should insurance

companies be permittedto classify certaingroups or occupationsas poor risks andrefuse insuranceor charge higherrates for thesecategories?(Look at the situationfrom both the point ofview of the companyand the applicant.)

. Using two colors todenote teenagers andnonteenagers, shadethe fatalities recordaccordingly on thechart' previously se-cured from the localpolice department.

13

SOURCE

. Marks, Seymour, "Biasin Auto Insurance,"Long Island Press,1/20/70, p. 15, PressBuilding, Jamaica,N.Y. 11433

. Worsnop, "Auto In-surancd Reform,"p. 32:"Among the occupationslabeled 'ineligiblerisks' in the under-writers' manual of amajor insurer areactors and actresses,garbage haulers, taxidrivers, dance-halloperators, profession-al athletes andconcert musicians;the same company'slist of 'questionablerisks' includesbeauty-parlor opera-tors and employees,fruit, vegetableand poultry dealers,and tavern operators."

'Who knows how he drives? You can see he belongs in the assigned risk pool."

Cartoon courtesy Long Island Press, 1/20/70

14

UNDERSTANDINGS

- Marital status .

A married man isconsidered abetter risk thana young bachelor.

- Mileage

Greater mileagedriven may resultin increasedpremium cost.The rate ofpremium may bedetermined bythe number ofmiles driven toand from work,or by the totalnumber of milesdriven in agiven period oftime.

- Safe driverA safe driver isbest describedas one who hasdriven for 3years without achargeable acci-dent. A greatdegree of skilland care mustbe exercised inthe 3 yearperiod to avoidan accident.


Debate: A married manis apt to be a morethoughtful - and there-fore a better - driverthan a single man.

. Poll the class todetermine how many milesthe students usuallytravel in a day -- during the school year- during summer vacation

. On the chalkboard, notethe number of accidentsinvolving the studentsduring each of theseperiods of time. Canany conclusions be drawnfrom these data?

SOURCE

. Local agent

. How many of the students' .

friends are "safedrivers"? Canvass localagents to determine thosecompanies which offer aplan which would reducethe premium of thosestudents satisfactorilycompleting or having:- a school-sponsored

driver educationprogram meetingnational standards

- high scholasticaverages

- multiple vehicles infamily

15

"How to Buy Auto In-surance Today,"Changing Times, 7/71,p. 9:

"A good part, if nota majority, of autopolicies are alsorated according tosome variety of "safedriver" plan inwhich premiums areincreased for threeyears or longer instep with "points"accumulated forchargeable accidentsand traffic convic-tions. One pointcould boost thepremium by 40 per-cent; two points 90percent; three points,150 percent, and fouror more, 220 percent."

. Your school drivinginstructor

UNDERSTANDINGS

- Special ratings

are often givenfor:- good students

- those taking

drivingtraining

- families withmultiplevehicles.

WHAT ARE THE DIFFERENTKINDS OF AUTOMOBILEINSURANCE WHICH CAN BE

PURCHASED?

. The common autopolicy actuallyconsists of agroup of individualcoverages, each ofwhich can be boughtseparately.


. Have students write tothe State EducationDepartments in variousstates to determinethe extent of drivereducation courses inthe high schools oftheir states. Also

question the durationof the course, thenumber of actualdriving hours perstudent, and at whatage or grade levelinstruction is offered(at age 16, 12thgrade, etc.).

. Show these statistir.sin chart form. If

possible, chart allof the states.

. Ask the class to listthe kinds of loss thatcould occur as a resultof automobile opera-tion. These might in-clude injury to thedriver, to passengersin his car, to pedes-trians, to occupants ofanother car, or to

property. Losses andexpenses might includeloss of income, medicalexpenses, towingcharges, etc.

16

SOURCE

. Ibid., p. 9: "If

your son or daughterranks in the top 20percent of the class,or has a B or betteraverage,or is on thedean's list, askthe company whetherit has a good-studentdiscount."

"The Auto InsuranceStory - Let's Lookat the Record":

. National Associationof Independent In-surers, 30 WestMonroe Street,Chicago, Illinois60603, p. 12

. "How to Buy Auto In-surance Today,"Changing Times, 7/71,p. 9

. Show filmstrip, "ATeacher's Guide toAutomobile Insurance,"Insurance InformationInstitute, 110 WilliamStreet, New York,N.Y. 10038.

UNDERSTANDINGS

. One type of auto-mobile insurancecoverage is calledLiability (com-pulsory in NewYork State).

LCD

Courtesy of the %swift* Infomettion Institute

Insurance Information Institute

SUGGESTED PUPIL ANDTEACHER ACTIVITIES SOURCE

. Ask the students to. Black, "Law

define the words, "li- Dictionary," 4th ed.,ability" and "indemnify." West Publishing Co.

Try to make the wordsmeaningful by havingeach pupil make asimple cartoon or linedrawing to illustratewhat he thinks the wordmeans.

17

Local automobileinsurance agent

Local attorney

School library

SUGGESTED PUPIL AND


. Start a glossary andscrapbook of insuranceterms and representa-tions.

. The insurance com- .

pany promises topay on your behalf(to the limits setby your policy) forbodily injury thatyou may have

caused someone,and damage thatyou may havedone to someone'sproperty, when youare legally liablefor the accident.

. Your liability in-surance also pro-vides that your in-surance companywill defend you ifsomeone sues youfor damage or in-jury caused byyour vehicle.

Who determines liability?Have students contact a- lawyer- judge- insurance agentCompare answers from each.

Arrange for the class ora committee of studentsto visit a trial whereauto liability is theissue. Discuss the reac-tions of the group to thetrial and to the verdict.

. Give reasons why it isimportant to have ade-quate liability cover-age. Relate this tothe outcome of the trialwitnessed by the students.

. Secure copies of "Reportof Motor Vehicle Acci-dent," MV 104, from localmotor vehicle bureau.

. Picture an auto accidentsituation on the chalk-board. Have studentsfill in MV 104 formsrelating to thisaccident.

. Apply rules concerning"liability" to determinewho is at fault in thissituation.

. Ask an attorney toexplain to the classthe meaning of "con-tributory negligence,""liability," and "lastclear chance." Role

SOURCE

. Local Motor VehicleBureau

. Constantin, Robert W.,Sue or Settle, CrownPublishers, Inc.,New York, p. 27:"In order to recover,you will be requiredto substantiate anyalleged injury ordamages, and you mustbe free from con-tributory negligenceand able to provethat the person fromwhom you are attempt-ing-to recover was infact negligent.Negligence is definedas 'the failure toexercise a degree ofcare equivalent to


. Liability pro-tection appliesto the policy-holder, familymembers, andothers who drivethe car with per-mission of theowner.

play situations in whicha jury of students mustdetermine whether therewas negligence on thepart of one or bothdrivers and the extentto which the other driver"contributed" to thcnegligence.

. Ask the students whatbodily injury protectiontheir policies or theirfamilies' policies pro-vide. Consider asituation in which ayoung father is killed.What might his lifetimeearnings have been?Might a jury take hislifetime earnings intoaccount when making anaward?

. Do student driversthink the protectionthey now have is adequate?

. Have students role playa situation in which aman and a child have beeninjured in an autoaccident. Who will payfor the medical expenses,the damaged cars, thetime lost from work, thepain and suffering?

. How will responsibilitybe assigned?

19

SOURCE

that which an or-dinarily careful andprudent person wouldexercise under thesame or similarcircumstances.' In

addition to meetingthese standards, oneis also obligatedto take advantage ofany 'last clearchance' to avoid anaccident. If appro-priate, this re-quirement could besatisfied by adriver's attempt tostop, swerve, sounda warning, or performsome similar act."

. Cole, Robert J.,"Personal Finance:'No Fault' Policy,"New York Times,9/30/71:"Two cars collide ata busy intersection.A man in one auto-mobile loses an eye.A child in the otheris paralyzed for life.

SUGGESTED PUPIL ANDUNDERSTAND.NGS TEACHER ACTIVITIES SOURCE

. You, the policy-holder, and membersof your family arealso covered ifyou drive someoneelse's car withhis approval.

. Your insurance com-pany will pay forinjuries to aguest in your car -even if the injurywas your fault.

. Every policyspecifies the maxi-mum amount the in-surance companywill pay.

:17

. How much time delay maythere be?

. Include in the scrapbookalready started clippingsregarding automobileaccidents, locally andon a national scale.

. Have students note thenumber of people injuredin each case, and thecases where more thanone was injured.

. Invite an insurance ad-juster and a claimsrepresentative to dis-cuss representativecases, including costsfor property damage,bodily injury andcollision damage.

. Ask each what was thelargest claim paid byhis company duringthe year? What coveragedoes he recommend inlight of today's costs?

. Have a committee ofstudents investigate thecost of replacing:- a fender- an entire new, mediumpriced car

- a 4-inch diametermaple tree

- a 100-foot section of

chain link fence

. Have each student choosea property coverage from$1,000 to $10,000 whichhe thinks is adequate.

20

Under today's in-surance system, bothlook first to suchbenefits as BlueCross and BlueShield, majormedical insuranceand any othercoverage they mayhave. Then they suefor damages."

. Local insurancerepresentative

. Local body shop

. Automobile dealer

. Local nurseryman

. Local fence company

"How to Buy Auto In-surance Today,"Changing Times, 7/71


. Ask each student to givereasons why he thinks theamount chosen is adequate.

. The amount oflability insurancewhich must becarried in New YorkState is presently10/20/5.

. It is wise to havemore coverage, ifyou can afford it,because many claimsrun above the Stateminimum require-ments.

. Purchasing addi-tional property in-surance above the$5,000 required isproportionatelycheaper and shouldbe considered.

. Over half the totalpremiums paid forauto insurance arefor liabilityprotection.

. Do the students thinkthis minimum coverage,made mandatory by Statelaw, is adequate?

. Have students give rea-sons, based on replace-ment cost investigation(activity just completed)or actual experience, tojustify their opinions.

. Givt, reasons why100/300/10 coveragemay be a wise purchase.

21

SOURCE

. "Automobile In-surance ... For WhoseBenefit?" p. 41:"Expensive as it is,the compulsory amountof automobile lia-bility insurance isnot enough either toassure victims offull compensation orto protect the vehicleowner against personalliability in a caseof serious loss(which may or maynot be occasionedby anyone's corre-

spondingly serious'fault'). The In-surance Departmenthas for the lastseveral yearsrecommended legis-lation to increasethe limits oncompulsory automobileliability insurance."

. Changing Times, 7/71,p. 7

. Worsnop, EditorialResearch Reports,1/13/71, p. 36

SUGGESTED PUPIL AND

UNDERSTANDINGS TEACHER ACTIVITIES SOURCE

Medical Payments(voluntary) -

. This coverage paysfor your own andyour passengers'medical expenses,even if you wereto blame.

. You are also coveredby this insuranceif you are injuredwhile riding inanother person'scar, or when struckby a car whilewalking.

. Policyholders canget $5,000 ofmedical expensecoverage for lessthan twice thepremium chargefor $500.

. Ask the students if theythink this coverage shouldbe made compulsory. Dis-

cuss whether insurancecompanies should includepayment for lost wagesalso. Why or why not?

. Have students pollfamily and friends tosee what medical expenseshave cost following anautomobile accident.Have students write upeach case briefly andpost the cases on adisplay board. Discussthe most interestingcases.

. Ask the students whatmedical coverage theywould consider adequate.Why?

. Write the State In-surance Departmentto learn (for NewYork State) how theautomobile insurancepremium dollar isdistributed. Howmuch goes for profit?for expenses? forclaims? for claimadjustment expense?for other items?

22

. Friends

. Relatives

. Local agent

. Margolius, Sidney,"Auto Insurance: TheNeed for Reform,"published in theAFL-CIO AmericanFederationist, 12/67,p. 3:"At present, thedollar you pay forauto insurance isestimated to be dis-tributed in thismanner; 5 cents forprofit load and con-tingencies (311 centsin New York State);25 to 35 cents forexpense load (ad-ministration, acqui-sition, commissions,field offices, ad-vertising, homeoffice, unallocated

UNDERSTANDINGS

. Another coveragewhich is sometimespurchased alongwith medical pay-ments is acciden-tal death benefit.

Collisionvoluntary)

. Collision in-surance isordinarily soldsubject to adeductibleamount - $50,$100, or more.This means thatyou must pay thefirst $50 or $100of the repairbill and your in-surance companywill pay thebalance of thecost.


. Accidental death benefitcoverage is presentlyvoluntary. Should itremain so? Debate thisquestion.

. Do students feel this isa necessity for teenagedrivers? for marriedmen? Why?

. Determine whetherlocal banks or autofinance companiesrequire collisioninsurance beforegranting new carloans. Why?

. Investigate how the in-surance company ar-rives at an amount topay for a car which hasbeen damaged or "totaledout." Poll answers ofall students to learn ifprocedure is standardamong all local agents.

23

SOURCE

claim adjustmentexpense); 50 to 60cents for claims anddirect claims expense;10 cents to allocatedclaim adjustmentexpense. Salesmen'sfees of 15 to 20cents of the premiumdollar are the largestitems in the expenseload."

. Changing Times, 7/71,p. 8:

"Accidental death.This coverage, notbought as widely asthe others, pays alump sum for death ina car accident, lossof a limb, blindness,fractures and dis-locations, plus aweekly sum for dis-ability. The acci-dental death benefitoften overlaps com-pensation from lia-bility and otherinsurance."

. Local bank

. Auto finance company

. Local agent or claimadjustor

30

UNDERSTANDINGS

. The higher thedeductibleamount, thecheaper theinsurance.

Cartoon courtesy Long Island Press


. What has been theexperience of pupils andtheir families in set-tling claims forcollisions? Were pay-ments promptly made?Were payments fair interms of actual costs?

24

SOURCE

. Fisk, McKee, & Snapp,James C., Applied.Business Law, South-Western PublishingCompany, New Rochelle,N.Y., p. 475:"Liability of an in-surer under collisioninsurance is limitedto direct and acci-dental loss to theinsured's car causedby collision withanother object or byupset. Only theactual cash value ofthe loss at the timeof the accident ispayable, and thisamount may be subjectto a deduction."


. If you have collision.insurance, your in-surance company willpay for damage to yourcar up to a statedmaximum when youcollide with anothercar or an object,such as a telephonepole, a house, etc. .

Your company willpay you even if youare the one whocaused the accident.

Comprehensive(voluntary)

. This coverage pro-vides for paymentto policyholderas a result ofperils other thancollision, suchas loss caused by:explosions, fallingobjects, fire,flood, brokenglass, lightning,missiles (rocks,baseballs, etc.),theft, vandalism,windstorm, colli-sion with birdsand animals.

Gather data from amongthe students and theirrelatives who drive tolearn the number whocarry this kind of in-surance. What is thedeductible amount foreach policy?

With collision coverageso costly, find out ifthe students and theirfamilies feel this cov-erage becomes prohibitiveonce a car has deprecia-ted substantially in val-ue. At what point ofthe car's value mightit be wise to dropcollision insurance andhave the owner assumethe risk?

. Secure a copy of dstandard fire insurancepolicy and compare how"extended coverage" fora home is similar to"comprehensive" for anautomobile.

25

(The deductibleamount is in accor-dance with policy.)

. Parents, relatives

. Students who owncars

32,

UNDERSTANDINGS

. Comprehensive in-surance also pro-vides money forrenting a sub-stitute car ifyour own car hasbeen stolen.

Uninsured Motorist(compulsory)

. This coverageprotects you if youare injured bysomeone who doesnot carry insurance,or by a hit-and-rundriver.

33


. Discuss the importanceof the rental provisionwhen -- living in the suburbsor rural areas wheretransportation may berestricted to theautomobile

- a car is necessary for;

business - in anyarea

. "Know-How You Needin Renting a Car,"Changing Times, 5/71,p. 15

. Speculate on the type of .

driver who would not car-ry insurance, although heknows he would be breakingthe law.

. Have students check par-

ents' policies to seewhether they have thisprotection.

. Dramatize a situationwhere an elderly womancrossing a road to reachher home is struck downby a speeding car, thedriver of which drivesaway without stopping.What protection wouldthe uninsured motoristclause provide her orher heirs?

26

"The Auto InsuranceStory," Let's Lookat the Record.,p. 36:"Uninsured MotoristCoverage is coverageunder which the in-sured's own companyprovides protectionfor bodily injuriesand death when anuninsured or hit-runmotorist is liable.It protects the carowner's entire familyliving in the samehousehold if injuredwhile in his car, inanother car, (whetherdriver or passenger),while a pedestrian,or as a cyclist. It

covers guests in theinsured car. Thecoverage applies ifthe accident takesplace anywhere inthe United States,its territories, orCanada."

WHY IS OUR PRESENT SYSTEM OF INSURANCE CALLED THE "FAULT" SYSTEM?Background Information

Our present fault system of automobile insurance centers on therationale and operation of what we call "liability" insurance. Liabilityinsurance accounts for nearly two-thirds of premium income from all linesof auto coverage.

Liability insurance was devised before the automobile was everinvented, and protected employers from financial ruin resulting fromaccidents to their employees or others. Later, liability insurance wasadapted to protect the owner of an automobile, in the event he should injuresomeone while driving. Later still, consideration was given to protectingthe victims of automobile accidents against drivers who were financiallyirresponsible - as evidenced by mandatory automobile insurance laws in moststates.

In theory, the fault system of automobile insurance is based on theconcept of negligence. Under this system, the victim must pay for his ownexpenses resulting from an accident -

a) in which he was the negligent party. Conversely, he should becompensated for his losses when he is the innocent victim, andthe other party is found to be negligent.

b) in which neither party to the accident was negligent. In thiscase, the in' company compensates neither.

c) both parties to the accident were negligent. In this case theinsurance company pays neither.

"The cornerstone of the present way of handling the personal injuryand property damage costs of automobile accidents is fault law which, whencombined with insurance indemnifying against liability for fault, becomeswhat we will call the fault insurance system.

"Fault law is a collection of rules for determining, as between twoor more individuals, who will bear the cost of an accident. The determina-tions are made on a case-by-case basis, with the cost being shifted fromthe individual on whom it fell only if some other individual can be shownto have been exclusively at fault. The legal standard for fault is basedon what a hypothetical reasonable man would have done under the circumstancesof the accident." "Automobile Insurance ... For Whose Benefit?" A Report toGovernor Nelson A. Rockefeller, State of New York Insurance Department,1970, p. 7

27

UNDERSTANDINGS

. In theory, under thefault system, thebad driver - the onewho caused the acci-dent and is there-fore considerednegligent - must pay

for the damage hehas done. Baddriving includesboth carelessdriving and reck-less driving.

. Actually, the one"at fault" usuallydoes not pay forthe damage him-self. His in-surance companypays it forhim to his victim,in return for thepremium the in-sured has paid.

. In order for thefault system towork, guilt mustbe determined:- by the in-

surance companyor by a judgeor jury.


. Invite a local judgeto relate to the classhis views regardingthe operation of thefault system. Howeffective does he feelit has been? Whatchanges, if any, doeshe recommend?

. Make a field trip tothe local trafficcourt. Based on the

visit to the court,have the class givetheir reactions tothe manner in whichthe fault systemoperates as exemplifiedby the cases heard.

. Have the class add anypersonal experience orknowledge of how thesystem operates.

. Discuss the statement:"A careless drivershould pay for hiscarelessness."

. Have pupils contrivesituations where "in-jury" takes place, andthen ask the class todetermine "fault."For example, one pupilmay fall over the out-stretched legs ofanother pupil and strike

a desk. Where did the

fault lie? With thepupil whose feet ex-tended into the aisle?With the pupil whofailed to observe the

obstruction? With both?If there were a realinjury, who should paythe bill for damages?

3528

. Senator Philip A.Hart, "The Case For/Against No-Fault AutoInsurance," PopularScience, 1/71, p. 56

. Changing Times, 7/71,p. 11

. "Insurance: The Roadto Reform," ConsumerRe orts, 4/71,p .223, Mount Vernon,N.Y. 10550

. Hart, Moneysworth,3/8/71, p. 3:"Of course, if youhave - besides lia-bility insurance -collision insuranceand medical-paymentsinsurance, your carwill be repaired andyour medical billspaid regardless ofwho was at fault.But liability in-surance is all thatmany people have,because this is allthat most states

require."


. Have pupils recountexamples of auto acci-dents which they haveobserved or in whichthey were involved.From the facts given,who was at fault? Wasit easy to determinefault? In how manysuch cases was theresome fault on bothsines, even if themajor fault was onthe part of only oneparty?

SOURCE

. Worsnop, "Auto In-surance Reform,"Editorial ResearchReports, p. 36

. Hart, Moneysworth,3/8/71, p. 3:"Joe Fault and SamInnocent are drivingtheir cars, and theyhave a collision.Both of them areinjured. Both ofthem have liabilityinsurance only.Mr. Fault, of course,is at fault, andMr. Innocent isinnocent. So Mr.

Fault's insurancecompany will pay torepair Mr. Innocent'scar and pay whatevermedical bills hehas. But Mr. Fault'sinsurance companywill not repairMr. Firal's car andit will not pay Mr.Fault's 'laicalbills. Mr. Faultmust pay for themout of his ownpocket because hewas at fault. Let'ssuppose, however,that Mr. Fault isonly mainly at fault,while Mr. Innocentis not entirelyinnocent. In thatcase (in most states),nobody gets any-thing. Both of themwere at fault. Next,let's suppose thatneither Mr. Faultnor Mr. Innocent werenegligent - a thirdcar, which drove


. A determinationof guilt in somecases wouldprobably entaila long and costlylawsuit. Thereare automobileaccident caseswhere neitherdriverat fault; thereare cases whereboth drivers arepartly at fault.The conclusionmay be thatneither driver iscompensated, andboth must bearThiir ownexpense.

. Assume the victim ofan accident has beenhospitalized, and bothparties are at fault.Dramatize the scenein the hospital withthe victim's familypresent. Considerthe pain and sufferingof the victim, themounting medical costs,the damage to thecar involved, and theproblems of a long-drawn-out lawsuit.

. Have students discussthe possibility thatif neither party to anaccident is "at fault"no money will be paidto either party orif one party was mainly"at fault," in this casealso no money would bepaid to either party.Does this seem a "fair"way to treat thesituation?

337 30

SOURCE

away, was responsi-ble for the accident.Again, neither Mr.Fault nor Mr. Inno-cent gets anythingbecause neither ofthem was at fault."

. Hart, Popular Science,1/71, p. 56:"Can you imaginehaving to go tocourt and prove thatyour negligencedidn't cause the firebefore collecting in-surance when yourhouse burns down?Or seeking out thefellow who sneezedon you in order tosue his insurancecompany for hospitalcosts of yourpneumonia?"

. In testimony beforethe U.S. Senate Anti-trust and MonopolySubcommittee, whichhas been investigatingthe auto insurancesystem for the last2 years, T. LawrenceJones, president ofthe American In-surance Association,said in December1969:

"The proceduresnecessary to determinelegal fault includeexamination of theaccident scene andthe vehicles them-selves, interroga-tion of witnesses,review of investiga-tion by policeofficers, physicalexaminations,


. If you carry the"voluntary

coverages" -

medical payments,collision, andcomprehensive,and have anaccident - yourcar will berepaired andmedical billspaid (accordingto the terms ofthe policy), nomatter who wasat fault.

WHAT ARE THE MAJORCRITICISMS OF THEFAULT SYSTEM?

The Fault SystemIs Slow.

. The necessity of

establishing whichdriver was neg-ligent, if any,and therefore,

which driver, ifany, is to be

compensated, hasbecome a "whoshot John,"fingerpointingcontest - andthere are so manycases that ourcourts are clogged

. Make a scrapbook ofclippings such as thefollowing (true) cases:"A 76-year-old Brooklynwoman lost her husbandin a car accident sevenyears ago and has yetto collect a penny ofthe benefits due her."Albany Times Union,9/26/71."The 10 largest autoinsurers have outstandingagainst them 359,500claims, 13 percent ofthem six or more yearsold."Albany Times Union,9/19/71

31

SOURCE

depositions, pre-trial conferences,and many other stepswhich take a greatdeal of time andcost a great deal ofmoney.

"In essence, the sameprocedures are

followed whether acase ultimately goesto trial or not, thusbuilding high costinto the system.The cost-buildingelements of thisadversary systemresult in a returnof premium dollars tothe policyholder thatis far lower than inother forms ofinsurance."

. Hart, Moneysworth,

3/8/71, p. 3:"A study by the FederalJudicial Center foundthat motor-accidentlitigation accountsfor (a) 11.4 percentof judge-time inFederal districtcourts, and (b) 17percent of judge-timein state courts.And as Chief JusticeWarren Burger hassaid, our overcrowdedcourts have madejustice in this

country more of amyth than a reality."


. Have pupils interviewparents and communitymembers. How long didit take to make settle-ment of claims? Whydid it take so long?How could the processbe speeded up?

Cartoon courtesy Long Island Press

SOURCE

"Automobile In-surance ... For WhoseBenefit?" p. 3:

"Even where the faultinsurance system payssomething, it paysslowly. Injuredvictims of automobileaccidents face-averagedelays in collectingunder automobile lia-bility insurance thatare ten times as longas the delays incollecting undercollision, homeowners,or burglary insurance,and forty times aslong as delays underaccident and healthinsurance."

32

UNDERSTANDINGS

. Determining theparty at faultis costly andtime-consuming.

. It is not uncommonfor some accidentvictims towait years forcohpensation.

. Studies have shownthat it takes over111 years to settlea $2,500 claim, anda 4- or 5-year waitis not uncommon insome counties ofour State.


. List some of the possiblefinancial consequencesto a family which doesnot receive adequate andimmediate cash followingan automobile accident.

. What would be the effectin your own family ifthe wage earner were outof work for a year due toan accident? if hospitalbills of $70-100 a dayhad to be paid duringthis time?

. Have students contact alocal hospital to learnwhat daily costs are in-volved in most accidentcases, in addition toroom costs.

. Role play a situationin which a claimant asksfor early settlement andan insurance representa-tive defends slow actionby his company. Howmight the interests ofthe two parties differ?Is each person's actionreasonable in terms ofhis own or his company'sinterests?

. Dramatize a case in whichvictims are forced totake what they can bar-gain for, thereby avoid-ing the court procedure.

. Interview a local judge,court clerk, or attorneyto learn the number ofcases settled out ofcourt, as opposed tothose which actually goto trial in yourcommunity.

33

SOURCE

"Traffic Accident Ex-.

perience in theUnited States;' In-surance InformationInstitute, 4/71

. "Automobile In-surance ... ForWhose Benefit?" p. 21:"The length of timefrom injury tosettlement is veryimportant to injuryvictims. Duringthat time there islikely to be hesita-tion to obtain thefullest desirablemedical treatment,for fear of theburden of paying forit. If the victim isa wage earner, thefamily may well goon reduced rations,and even become a'relief case' whileawaiting the settle-ment."

. Ibid.: "The averagedelay in paying auto-mobile personalinjury liabilityclaims in New Yorkis well over a year."

. Marks, S.: "'No Fault'Insuranee,A Boon forDrivers?" LongIsland Press, 1/21/70

40


. Studies also showthat the largerthe claim, thelonger the waitwill probably befor settlement.

. How would students feelabout a delay of a yearto settle an accidentif they were involved?Would they considersettling out ofcourt? Give reasonswhy they might wait,or what pressures mightcause them to settleout of court.

. With the help of anattorney, plan a mootcourt in which anaccident case isbrought to trial. Youwill need a judge,plaintiff, defendant,their attorneys, wit-nesses, and a jury.After all the factshave been presented,ask the jury to reacha decision as to guiltand to render anequitable verdict.

4134

SOURCE

. "Auto Insurance -No Fault in theFuture?" Every-body's Watt, CreditUnion NationalAssociation, Box 431,Madison, Wisconsin,Summer 1971:"Fault insurance isalso responsible fora backlog of courtcases. Of New YorkState's 221,000pending civil actioncases, approximatelyone-half are autoaccident cases. Thismeans it may takeyears before yourcase is settled. In

large cities or wherelarge damages areinvolved, it may takeas long as five yearsbefore a case isdecided - in themeantime possiblyforcing you into debtfor an accident youdidn't even cause."

"Automobile In-surance ... For WhoseBenefit?" p. 21:"The delays are longboth in and out ofcourt. The casesthat go to trial,which involve thelargest claims of all,encounter truly in-credible delays -between four and fiveyears in the largestcounties in thisstate. But even forclaims that do not goto trial, the fault


The Fault SystemIs Unfair.

. The main socialpurpose of auto-mobile liabilityinsurance is to seethat innocentvictims are paidtheir losses.

Opponents of thefault system claim:- many victims areshortchanged

- many victims donot get what isdue them

- those who needthe money themost - thosewith the largestclaims and thegreatest need -are under-compensated.

. Victims with lossesof $25,000 receivedon the averageonly 30 percent ofthat amount.

. Studies show thatthe present systemfavors the "slightlydamaged" over the"severely damaged."

. Develop the analogybetween the injusticesof a fault system andsome life situations bya skit depicting afamily situation where:- some children areshortchanged intheir allowance

- other children getno allowance

- those who'need theallowance the mostget the least 'Firthose who need theallowance the leastget the most.

. Illustrate the allegedunfairness by a seriesof cartoons.

SOURCE

insurance systemtakes a long time topay. And the delaysare getting worse,not better."

. Consumer Reports,4/71, p. 224:"One of the intoler-able things aboutit (the fault system)is that the systemworks out unfairly.People with minorlosses tend to beoverpaid, whilepeople with severelosses are likely tobe underpaid."

. Have students list rea-sons why an insurancecompany would be willing -

and anxious - to settlesmall claims quicklyand out of court.

. Role play a situationwhere one student actsthe part of a claim

adjustor and others actthe part of motorists,one with a minor claimfor a crumpled fender

35

. Worsnop, Editorial

Research Reports,1/13/71, p. 39

. Ibid., p. 39:"A two-year study onautomobile insurance,completed in theautumn of 1970 bythe Department ofTransportation,stated that theaverage $500 claimwas settled for fourand one-half timesthat amount. On theother hand, claimantswith losses of


and the other with amajor claim for ex-tensive and expensivehospitalization, withcontinuing pain.

. Ask an attorney todiscuss the "fairness"of the fault system ofautomobile insurance.In his experience dothe insured get areasonably fair settle-ment of their claims?When might an attorneysuggest that a clientsettle out of court?When might he recommendthat the case go tocourt? Does he feel

that the juries beforewhom he has tried suchcases have, in general,rendered "justice" toclaimants with regardsto the amount of thedamages awarded? If not,

what suggestions does hehave for improvingthe situation?

. Why might an insurancecompany be unwilling tosettle h large claim

out of court?

36Li:

4

SOURCE

$25,000 received anaverage of only 30percent of thatamount from insurance.The larger the claim,moreover, the longerthe wait; the averagedelay in settlementon claims of morethan $2,500 was 19months."

. "Automobile In-surance ... For WhoseBenefit?":"...Since it is to theinterest of the insur-ance company tosettle small claimsand avoid delays andcourt costs, thetrend is to over-paysmall claims andunder-pay largeclaims. One studyindicates of accidentvictims with smalleconomic losses, onethird were over paid,while of those withlarge economiclosses, none was over-paid and all wereunder paid. In otherwords, the presentinsurance systemovercompensates the.slightly injurgI andundercompensates theseriously injured."

. Worsnop, EditorialResearch Reports,p. 39:"Insurance companiesare willing to settlesmall claims quicklybecause they are notconsidered worth thetrouble to contestin court. The small


. The present systemfavors the richover the poor.

. Role play situations inwhich there has beenserious personal injury,long hospitalization,mounting expenses, andmany delays in bringingthe case to settlementin a court:

- Case A - The family'sfinancial resourcesare strained. Thereis no money withwhich to pay hospitalbills. The attorneyfor the claimant urgesthe family to holdout longer in thehope that a substantialverdict can beobtained.

- Case B - The situationis the same as in caseA but the claimant'sattorney suggests anout-of-court settle-ment for a reducedamount.

- Case C - The situationis the same as inCase A except that theclaimant's family hasample resources tomeet the costs in-curred as a result ofthe injury. However,the claimant is tiredof the long delay andis willing to settle,while his attorneycounsels patience inthe hope of a largejury award.

claimant often cancollect as well fromhis medical insurancecompany. Thispattern of generoustreatment of thosewith relativelylittle injury has ledone observer, de-scribing the processof compensating fortraffic injuries inNew York City, toexclaim, 'Fromwrecks to riches!'Because a large claimrepresents a poten-tially large loss,the insurance companyalmost always willhold out for settle-ment in court. Thelong delay involvedin bringing suchcases to trial oftenacts as a powerfulinducement to theclaimant to acceptan out-of-courtpayment smaller thanhe wanted."

. Should a victim of anautomobile accident bemade to suffer financiallybecause he cannot affordto employ the best attorney,take the time off for courtappearances, or wait,possibly years, for settle-ment?

37

UNDERSTANDINGS

. Victims earningover $10,000, andin a position toretain counsel,recovered anaverage of 61 per-cent of theirlosses. Victimsearning less than$5,000 recoveredonly 38 percentof their losses.

SUGGESTED PUPIL ANDTEACHER ACTIVITIES -

. Interview a localattorney to learn howhe sets his fees forauto accident cases.Does he charge a setfee, or work on contin-gency basis? Why?

. Debate: Lawyers' feesin accident cases areexcessive. (Try to befair to both sides.Remember that theattorney has made alarge investment oftime and money toprepare for law practice,that even what appearsto be a simple case mayinvolve hours or daysof preparation, andthat if he takes thecase on a contingencybasis he may be paidnothing for his effortsif the court decisiongoes against him.On the other hand, thevictim is the one whosuffered the economicloss; he may have hadpain and suffering; hishealth may be permanent-ly impaired.)

SOURCE

. Lazarus, The NewRepublic, 4/17/71,p. 22

. "Automobile In-surance ... For WhoseBenefit?":"Only about 1 percentof automobile lia-bility claims aredecided by a court.The other 99 percentare decided out ofcourt. Usually thelatter type of settle-ment takes placebetween the personmaking a claim, orhis lawyer, and aninsurance adjustor.Most claims aresettled on a bar-gaining basis ratherthan on the basis ofequity. Each of thebargainers tries toget the most out ofthe other; theclaimant wants asmuch as he can getand the insurance ad-justor wants tosettle for as littleas possible. Thusthe ignorant or poorare likely to settlefor less than thosewho know the law andhave enough money tohold out for ahigher settlement."


The Fault SystemIs Inefficient.

. The fault systemis very expensiveto operate.

. Less than half thepremium dollar isreturned to thepolicyholder in theform of claimpayments.

. Make a chart contrastingthe administrative costsof auto insurance withthe administrative costsof running -

- Social Security- Blue Cross- health and accident

insurance.

. Dramatize the ineffi-ciency and unfairnessof the fault system bydistributing playmoney or privileges onan inequitable basis:- give more to blondes

than brunettes- more to left-handedthan right-handedstudents

- have the teacher (re-presenting the insur-ance company) keepone-third

SOURCE

. Ibid., p. 35:"As consumers, we aredeeply concerned withthe contrast betweenan administrativecost of 3t in SocialSecurity, 7t forBlue Cross, 17t forhealth and accidentplans, and 55t ofthe premium dollarfor auto insurance,leaving only 45t topay victims' costs.(Included in the55t is 25t to paythe legal expensesof an adversarysystem of awardinginsurance claims.)"

. Social SecurityOffice, Washington,D.C.

. Local Blue Crossoffice

. National Associationof Independent In-surers, Let's Lookat the Record!, p. 4

. Ibid., p. 4:"(a) serious chargeagainst the presentautomobile insurancesystem is that sofew of the dollarspaid in premiumsever reach the victimsof accidents. Whathappens to eachdollar paid in lia-bility insurancepremiums? First ofall, insurancecompanies and agents

SUGGESTED PUPIL AND


- have two students, re-presenting lawyers andclaims adjustors, keepone-fourth

SOURCE

use up 33 cents; thenlawyers and claimsinvestigators takethe next 23 cents -taking 56 cents outof every premiumdollar. Even theremaining 44 centsof the premiumdollar are not dis-tributed in terms ofeconomic loss. Ac-cording to one report,21.5 cents are paidfor 'general damages'or 'pain and suffer-ing,' leaving only14.5 cents as com-pensation for thenet economic loss ofaccident victims."

ESTIMATED DISTRIBUTION OF YOUR LIABILITY INSURANCE DOLLAR

28t

Expense load-Administration,commissions,

-Advertising,etc.

rofit

Contin.entle

23t

Lawyers and ClaimsInvestigations

44t

Accident Victims

40


The Benefits ofthe Fault InsuranceSystem Are Un-mdictable.

. About 25 percent ofautomobile accidentvictims receivenothing for theirinjuries.

SOURCE

. Invite interested parents . Parentsto discuss their ex-periences with automobileinsurance costs andclaim settlements.

. What suggestions and re-actions do parents haveregarding automobile in-surance?

. Play a game of "Automo- . "Automobile In-bile Insurance Roulette" surance ... For Whosein which 1 out of every 4 Benefit?" p. 18:claimants goes uncompen- "One out of everysated for loss sustained four people sufferingin an accident. Assume bodily injury in aneach student will be part automobile accidentof the 25 percent, and in this state receiveseach suffers an economic nothing whatsoeverloss of $1,000. Ask from the fault in-students to list the surance system."effect of this loss ontheir lives, in terms of . Ibid., p. 25:how they will pay for "The term 'economicany medical or repair loss,' as used inexpenses, in addition to this report, includescontinuing to pay for past and future dollartheir normal, daily losses resulting fromexpenses. Have them also (a) bodily injury,examine the possibility including hospital,of going into debt (taking surgical and medicalout a loan) to cover the expense, loss of in-loss of $1,000. 'come and miscellaneous

out-of-pocket ex-penses; and (b)damage to automobilesand other, property."


The Fault InsuranceSystem FostersDishonesty.

. In serious cases,the victim some-times cannot waitfor settlement -and sometimes isfinancially unableto defend himselfagainst aninsurance company.

. In other cases the"victim" may fakean injury hopingto coerce theinsurance companyinto settlementor to play on thesympathies of ajury.

The Fault InsuranceSystem Is Expensive.

. Set up a hypotheticalcase in which aninsurance claim adjustorand his claim managerare discussing whetherto settle a case ordelay.The case concernsMr. Doubtful who claimsto have a whiplash neckinjury. X-rays do notreveal any damage,yetMr. Doubtful claims$5,000 for "pain andsuffering." The in-surance claims depart-ment feels that theinjuries are not realbut recognizes that ajury might rule againstthe company. Theyconsider these facts:Delay in making a set-tlement is sometimes tothe advantage of the in-surance company.In cases of minor in-juries, victims mayprolong the procedure,and eventually the in-surance company willsettle in order to closethe case. What do theydecide to do in thehypothetical case?

. Rates for auto lia-bility insurancehave almost doubledin the past 20 years.At the present rateof increase, they

. Compare the increase inrates for auto insurancewith the increase incosts for -- auto repairs- gasoline

42

SOURCE

. Ibid., p. 24:"Thus, under thefault insurancesystem, determina-tions are made eitherby an overburdenedjudiciary on stalefacts or else byinsurance adjustorsin a bargainingprocess. Partlottery and partbazaar, the fault in-surance system isunreliable and un-predictable."

. Ibid., p. 38:"In general, thehighly abstractstandard of liabilitycalled 'fault' andthe indeterminatemeasure of damagescalled 'generaldamages' or 'painand suffering' offerrich rewards to theclaimant who willlie, the attorney whowill inflame, theadjustor who willchisel, and theinsurance. companywhich will stall orintimidate."

. Ibid.

. Marks, Seymour,"Today's 'Tender' CarsCost More to Insure,"Long Island Press,1/22/70

UNDERSTANDINGS

will double againin less than halfthat time.


- tires- medical care, etc.

. Ask the students tolocate in their homesan expired insurancepolicy (or consult aninsurance agent forthe information), andcompare the costs forthat policy with thecost for their parents'present policy. Be

sure the coverage isthe same to make thecomparison fair.

SOURCE

. Changing Times, 8/71,p. 47:

"Which has risen most(in cost) over thepast ten years? Localtransit fare rose77%; cost of auto in-surance, 67%; autorepairs and main-tenance, 50%; regis-tration, 34%; usedcar, 30%; gas andoi1,13%; new car,5%."

CAR ACCIDENTS COST MORE-AND SO DO AUTO INSURANCE PREMIUMS

1960 1965 1970**SAN)

$

NSURANCECOSTS

A

INSURANCECOSTS

$INSURANCE

COSTS

$1237

CLAIM

COSTS

$1405CLAIMCOSTS 1

CLAIMCOSTS

Average cost of claims paid, excluding Massachusetts

**preliminary figures Source: Insurance Facts 1971

Graph showingwhy policies

are canceled isbased on

an analysis ofcomplaintsreceived by

AttorneyGeneral Louis

Lel howitz.

UNDERSTANDINGS

Why Policies Are Cancelled

Termination ofAgencies

Insured Lives inHigh Risk Areas

Too Many Accidents

Drivers Under 25Years of Age

Too Many Claims(Many times this

means a single claim)

No Reasons or"UnderwritingJudgement"

11111111

10 20 30 40 50 60 70 80 90 ICPercentage of Policy Terminations(Cancellations and nonrenewals)

0

Chart from Newsday, Long Island, 4/1/71

WHY HAVE CANCELLATIONSAND NONRENEWALS OFAUTOMOBILE INSURANCEINCREASED?

. A high percentageof the familieswith personal in-jury accidentshave had their in-surance canceledor renewal refused.


. Investigate the validity .

of the information onpolicy cancellation shownin the source column onthe right. A representa-tive of the InsuranceInformation Institutestates that "this does notagree with our findings."Write the Institute, 110William Street, New York,N.Y. 10038, for copiesof:

- North Carolina - PublicAttitude Toward AutoInsurance - 1971

44

SOURCE

"Public AttitudesToward Auto insurance,"Department of Trans-portation Auto In-surance and Compen-sation Study, p. 33:"Fourteen percent ofcar-owning familiesreport that they havehad their insurancecanceled or have beenrefused renewal inthe past. Nearlytwice as many peoplewith personal injury


. Some of thesedrivers continuedto drive despitethe fact thattheir insurancehad been canceled.

. Those unable tosecure insurancethrough normalchannels may beable to secure itin the assignedrisk pool. Suchinsurance is morecostly.

- Ohio - Public AttitudesToward Auto Insurance -

1971

- Washington - PublicAttitudes TowirFirgaoInsurance - 1971

- Florida - PublicAttitudes Toward AutoInsurance - 1971

- National PublicAppraisal of AutomobileInsurance - 1971

. What conclusions do youdraw from this evidence?

. Do you know of any driverswho have continued todrive after their insurancewas canceled? What hazardsdoes the practice presentto such drivers? to thosewho might suffer injury orloss as a result of

accidents involving suchuninsured drivers?

. Have students checkvarious sources for adefinition of "assignedrisk" and how it works,or ask a local automobileinsurance agent todescribe the plan andquote examples of ratescharged.

. Do any of the studentsor their parents belongto the assigned riskpool? Why? What hasbeen their experiencewith this plan?

45

SOURCE

accidents (23 percent)in the last two yearsas those withoutaccidents reportedhaving been canceledor denied renewal ofa policy some time inthe past."

"Let's Look at theRecord!" p. 18:"Assigned Risk Plan,a means of insuringdrivers who cannotobtain coverage onthe voluntary

market."

. McNaughton, Donald J.,& Riley, Robert K.:"A Review of theAutomobile InsuranceAssigned Risk Plan inNew York State,"printed by Stateof New York Departmentof Motor Vehicles

SUGGESTED PUPIL AND


WHAT HAS BEEN THEEFFECT OF SPIRALINGAUTOMOBILE INSURANCECOSTS?

. Increasing in-surance costs andassignment to theassigned riskpool have poseda burden ondrivers.

. Automobile In-surance Plans(formerly known asAssigned RiskPlans) have beenestablished inevery state todistribute amongall companies, inproportion to thenumber of auto-mobiles insured,the burden ofproviding insurancefor the high-riskautomobile ownerswho are unable toobtain insurancethrough normalchannels.

. Discuss: Some people -especially those withlow incomes - simplycannot afford insurancetoday."

. Consider the followinginformation fromGovernment EmployeesInsurance Company AnnualReport 1971:"The assigned riskcomponent of our auto-mobile volume for 1971represented 8.7% of ourtotal written premium, thehighest in our history.The combined loss andexpense ratio of 125.9%,a fractional increaseover the 125.3% ratio in

the prior year, coupledwith the staggering in-crease in volume, produceda record assigned riskless of $8,040,529. The

underwriting results since1962 for our assigned riskbusiness are shown below:

SOURCE

. "Automobile In-surance ... For WhoseBenefit?" p. 42:

"The soaring costs ofliability insuranceare making automobileownership impossiblefor many poor Ameri-cans. If they cannotown automobiles, theycannot emerge from thecongested cities wherepublic transportationis available and can-not hold jobs at out-lying factories. The

present system ofreparation producestwo kinds of victims -those who are in-adequately compensatedfor their injuries andthose who are chargedthe high premiumsrequired by a waste-ful system."

ASSIGNED RISK LOSS EXPERIENCE% of

Total WrittenPremium

Combined Lossand Expense

Ratio

Under-writing

Loss

1962 3.8% 133.0% $1,061,0981963 3.6% 135.2% $1,096,5631964 3.9% 132.2% $1,282,3761965 4.9% 142.2% $1,896,3181966 4.5% 141.6% $2,442,8361967 4.5% 139.7% $3,065,7921968 4.2% 137.1% $3,006,101

1969 4.6% 128.8% $2,875,6661970 7.3% 125.3% $4,054,5071971 8.7% 125.9% $8,040,529

The tremendous upsurge inour assigned risk volume

53 46


. It is claimed thatover one-half ofthose forced tosecure insurancein the assignedrisk pool had noprevious accidentor conviction.

WHAT ARE SOME OF THECRITERIA FOR EFFECTIVEAUTO INSURANCE REFORM?

Automobile In-surance ShouldPay Benefits toAll Auto AccidentVictims.

in 1971 represents anindustry-wide trendhaving essentially socialderivations."Who bears the cost ofthis $8 million dollarloss? What are thesocial effects of sucha policy? What are theeconomic effects?

. Make a school or commu- .

nity survey of those forcedto secure insurance in theassigned risk pool. Do

the findings bear out thecontention that "overone-half had no previousaccident or conviction"?

. The criteria listed inthe Understandings columnhave been recommended bysome insurance experts.Each should be discussedby the class. How many ofthe criteria areacceptable? Which onesare not? What othercriteria, if any, shouldbe added?

. If the criteria are notacceptable, ask thestudents to draw uptheir own standards ofwhat they think shouldbe required for a goodinsurance program.

47

"Insurance: The Roadto Reform," ConsumerReports, 4/7p. 225

. "Automobile In-surance ... For WhoseBenefit?"

54


. List some of the ways inwhich the uncompensatedvictim of an accidentmay become a burden tosociety.

All Economic Losses . Ask the class to check aShould Be Covered. glossary for the defini-

tion of "economic loss."In light of what theyhave learned, how mightthey add to this defini-tion?

. Payment should be . Have a buzz session toprompt. discuss: "Justice de-

layed is justice denied."

. Relate prompt paymentto the daily lives ofthe students. Ask howmany have part-timejobs. Would a boydelivering papers bewilling to wait 3, 4,or 5 weeks for payment?

. How many have purchaseditems (perhaps a base-ball mitt), returnedthe items for credit,and been given a credit

48

SOURCE

. Ibid., p. 25

. Marks, "jo Fault' In-surance, A Boon forDrivers?" Long IslandPress, 1/21/71:This war of attri-tion by the insurancecompanies against theclaimants goes onyear after year.The longer the courtdelays - up to 411years in Long IslandSupreme Courts - thegreater the advantageto the company."A vast majority ofsubstantial claims aresettled without trial,long after courtaction has begun,because of economiccompulsion."

"Automobile In-surance ... For WhoseBenefit?" p. 68:"From the point ofview of the victim,any system that beginsto deliver benefitsquickly can reducehuman suffering, hard-ship and permanentdisability."Society at large alsohas an interest in theprompt payment of

UNDERSTANDINGS

Automobile In-surance ShouldBe Efficient.

. A larger share ofthe premium dollarshould be returnedto the insured.

Premiums ShouldBe Low.

. All drivers,especially thoseof low income,should be able toprovide adequateinsurance forthemselves andtheir familieswithout a financialhardship.


slip only? Do they feelit fair not to be paidpromptly in cash?

. Would a federally-spon-sored program, availablin conjunction with anational health plan,be the answer? (Every-one would be coveredfor at least a minimumamount.) Do Federalprograms really provideinexpensive services -or is the burden just

49

SOURCE

accident victims.While he bargainswith an adjustor orwaits for a court,the victim withmedical bills andwithout earnings hasto get the moneysomewhere. Thelonger his paymentis held up, the morehis accident costis likely to becomea personal tragedyfor him and hisfamily, and the morelikely it is thatthe burden will bepushed onto others -such as relatives,friends, charitiesand, ultimately,tax-payers - whothereby become thesecond-level victimsof the accident."

. Ibid., p. 64:"To the consumer, in-creased efficiencymeans lowerpremiums."

. "A Look at Nationale Health Insurance,"

Everybody's Money,Credit Union NationalAssociation, Box 431,Madison, Wisconsin,Summer 1971, p. 26


Provision ShouldBe Made forPeriodic Paymentsto Victims.

. Periodic paymentswould be part ofa rehabilitationprogram, both ofwhich might continuefor years. Peri-

odic payments alsolead to more preciseawards.

SOURCE

shifted from the recip-ient to the taxpayersat large?

. Group health and life . Margolius, "Auto

insurance has worked Insurance: The Need

because administrative and for. Reform"

selling costs are re-duced, and the savingis passed on to theinsured in premiumslower than those paidon an individual basis.Debate: Group auto in-surance would be lesscostly and more efficientthan insurance purchasedindividually. It shouldbe available to all carowners.

. Discuss the desirability . "Automobile

of periodic rather than surance

lump-sum payments to Benefit?"

victims requiring a re-habilitation program.Not all people can handlemoney to their own bestinterests. For some, alump sum might mean a"spending spree." Reha-bilitation would bedeterred as a result, andthereafter the victimmight become a burden tosociety.

. Dramatize a situation inwhich a 21-year-old secre-tary is rewarded with a$25,000 settlement afteran auto accident. In theskit, use fake money, paidto her by the insurancebroker. Show her going from

57 50

In-

For Whosep. 69


Automobile In-surance ShouldBe Reliable.

. The victim shouldknow what benefitshe will receiveand not be keptin the dark.

Automobile In-surance ShouldBe Operated ByPrivate Enter-prise - At AFair Profit.

. (For a contraryopinion, see theaction of Manitobaas related in the,Source column.)

shop to shop, dissipatingthe whole sum.In another skit,showother ways in which shemight use the money asa savings fund, invest-ment, etc.

. Have students make in-dividual lists showingwhat responsibilitiesthe head of a housewould be concernedabout if he were anauto accident victim.How would knowing inadvance of his exactbenefits help ease hismind?

. Have students conduct apoll about the desirabil-ity of having a federally-operated insurancesystem - if the auto-mobile insurance in-dustry does not soonrectify the faults ofour present system. Havea committee of studentsinterview various highschool social studiesteachers or others fortheir reactions.

. Is it solely the respon-sibility of the insuranceindustry to make changesor does part of the

51

SOURCE

. Ibid., p. 70

. Everybody's Money,Summer 1971, p. 25:"In Canada, compulsoryno-fault insurancewill go into effectin Manitoba nextNovember. The newsystem, the ManitobaPublic InsuranceCorp., eliminatesinsurance agents,profits and advertise-ments. The resultwill be lower pre-miums. Automobileowners and driverswill be automaticallycovered when theyregister their ve-hicles each year."

58


WHAT IS NO FAULTINSURANCE?

. No fault is autoinsurance inwhich there isno necessity toprove anyone'sfault ornegligence.

. The types of nofault insuranceplans - either nowin existence orproposed - may beplaced into threecategories:- total

- substantial- limited

. Total no fault,WiTurest form ofthe many no faultproposals, pays alleconomic lossesto all insuredparties to anaccident withoutregard to fault.There are no limitsto the total amountof benefits. Thereare no lawsuits.

. You would collectno matter who wasat fault.

responsibility fall uponthe regulatory agenciesand State Legislature tomake changes? If thelatter bodies are alsoinvolved, how cancitizens most effectivelyexpress their desiresfor change?

. Have pupils relateexamples of life ex-periences analagous tono fault automobileinsurance. If theirhouse burns down, doesthe fire insurance policycall for payment regard-less of fault? Doeshealth insurance payregardless of fault?Does theft insurance payregardless of fault?Do their parents feedand clothe them regard-less of fault?

. Have students list thecriteria for a "good"insurance system (fromtheir point of view)and compare thesecriteria against ourpresent fault systemand the proposed nofault system.

. Have students createthe circumstances andlist the consequencesof an accident -- where the party atfault receives nocompensation

39 52

SOURCE

. Editorial ResearchReports, p. 29:"Proponents of reformof automobile lia-bility insurancegenerally advocate asystem in which thereis no necessity toprove fault or negli-gence. Automobileliability coveragethus would come toresemble theft orfire insurance - thepolicyholder wouldapply for compensa-tion to his owncompany for anylosses he suffered."

. "Automobile In7surance ... For WhoseBenefit?" p. 79

UNDERSTANDINGS

. After an accident,you would applydirectly to yourown insurance com-pany and be paidfor medical ex-penses and wagelosses, up toprescribed amounts.

. Under the total nofault plan no com-pensation would bepaid for "pain andsuffering."

. Substantial no faultplans are liketotal no fault plansexcept that theright to sue is re-tained where eco-nomic loss is large.

. Limited no fault is11Wsubstantialno fault except indegree. Settlementwithout suit isrestricted to evensmaller claims andmost aspects of thepresent tort systemare retained.

. Most no faultproposals are nottotal programs,bu rather establishlimits beneathwhich benefits arepaid automatically.Beyond those setlimits, suits fordamages or painand suffering arepermitted.


- where the party atfault is compensatedas well as the partynot at fault

- where both partieswere partially atfault and neitherwas compensated (orboth were compensated)

Have students use modelcars to demonstrateaccidents to illustratethese cases.

. Debater A monetaryvalue cannot be placedon "pain and suffering."

. Ask the class to place amonetary value on "painand suffering" in thefollowing situations:- a bloody nose results

from a car accidentan accident in which

the car is demolished,but no one is hurt

- the driver fully re-covers physicallyafter an accident,but is fearful whendriving

- the driver complainsof persistent backpain as a result ofan accident but isable to carry onnormal activities

- the driver is hos-pitalized for 3months, and, accord-ing to medical testi-mony, appears to bein constant pain.

53

SOURCE

. "Report of AmericanInsurance Associa-tion's Special Commit-tee to Study andEvaluate Keeton-O'Connell BasicProtection Plan andAutomobile AccidentReparations," TheAmerican InsuranceAssociation, 85 JohnStreet, New York,N.Y. 10038, 9/9/68:"Pain and sufferingare not susceptibleof objective measure-ment and should notbe included in areparations system."

. "Ahead: A New Systemof Auto Insurance?"U.S. News and WorldReport, 4/28/69

. "Insurance: TheRoad to Reform,"Consumer Reports,p. 223

. Worsnop, "Auto In-surance Reform,"Editorial ResearchReports, p. 43

60

10'

SUGGESTED PUPIL AND


. Some plans whichhave been proposedmay be classifiedas total no faultplans, such as theNew York State InsuranceDepartment plan.

. It has been estimatedthat compulsory autopremiums would be re-duced by 56 percent iftotal no fault wereintroduced in NewYork State.

WHAT IS THE HISTORYOF NO FAULT INSURANCE?

. In 1932,a commit-tee at ColumbiaUniversity proposedthe "ColumbiaPlan."- This plan pro-

vided a sched-ule of benefitssimilar to ourpresent Work-men's Compensa-tion.

. The Columbia Planalso provided thatthis type of autoinsurance would becompulsory.

. Saskatchewan,Canada, has a nofault automobileinsurance planwhich has beenreported as suc-cessful since itsinception in 1946.

. Puerto Rico has ano fault, Govern-ment-run plan.

. Compare the benefits ofworkmen's compensationwith the no faultproposal for automobileinsurance.

. Poll community membersabout their stand onno fault insurance. Do

their opinions agreewith those of the Galluppoll in which 4 out of5 citizens who knew whatno fault insurance isfavored the plan?

. Write the AFL/CIO, theUnited Auto Workers,the editor of your localpaper, and others to gettheir stand on no faultinsurance.

' 6154

SOURCE

. Everybody's Money,Summer 1971, p. 25

. "No-Fault Auto Insur-ance," printed byThe Travelers In-surance Company:"The dollar amount ofbenefits for medicalexpenses and lostwages and the extentof the limitation onpain and suffering re-coveries vary fromplan to plan."

. Educational Research

132.0 1/13/71,p. 40

. Fisk & Snapp, ApplitdBusiness Law, p X53:"Workmens' compensa-tion laws in effect,abolished the common-law defenses of theemployer by providinga system of compensa-tion for workmen in-jured in the courseof employment regard-less of fault."They also providebenefits for thefamily in case of theworker's death.Under workmen's com-pensation the questionof employee negli-gence or fault hasbeen replaced by twofairly simple tests:(1) Did it arise outof and occur duringthe course of employ-ment; and (2) whatis the extent ofthe employee's injury?

UNDERSTANDINGS

. Massachusetts hasrecently adopted alimited form of nofault - the firststate in the Nationto do so.

WHY IS IT IMPORTANTTHAT STUDENTS UNDER-STAND AND TAKE APOSITION ON NOFAULT INSURANCE?

. There appears tobe unanimousopinion that thepresent automo-bile insurancesystem needsreform.


. Instruct the class tobring newspaperarticles to class onhow the Massachusettsplan and other nofault plans areworking. What doproponents say? Whatdo opponents say?

. Instruct students toadd to their scrap-books material con-cerning new develop-ment or proposalsfor no fault insurance.Check local papersfor items.

55

SOURCE

(frequently a medicalquestion) In otherwords, if the workeris injured while onthe job, he will bepaid in accordancewith the extent ofhis injuries, exceptin the case of in-tentional injuriesand intoxication."

. "Law Memo 573," fromthe American In-surance Association,85 John Street, NewYork, N.Y. 10038

. Massachusetts, whichbecame the first stateto enact no faultauto insurance, hasalready reducedbodily injury in-surance costs by 15percent and "every-thing indicates thatfurther reductionsare definitely inorder for 1972,"says John G. Ryan,the state's insurancecommissioner. In itsfirst 6 months,no fault resulted inboth fewer claims(5,032, down from11,393) and smallerclaims (averaging$160, down from$343).

62

PI

UNDERSTANDINGS

. The shape thatreform will takewill be largelyinfluenced bypublic reactions.

. Governor Rockefellerhas promisedto make no faultinsurance a prioritymatter in the nextsession of theLegislature.

. President Nixon andcongressionalleaders are pressingfor automobile in-surance reform on thenational scene.


. The class may find itinteresting to followthe 2-year runningcontroversy in the NewYork State Legislatureover the no faultproposal. The news-papers of thisperiod carried manyreports and opinionson this topic. Amongthem are these:- "No Fault Skirmishes

End and Real Battleis Set," New YorkSunday News,4/23/72

- "New No Fault State"Albany Times Union,4/23/72

- "Squeeze Play atAlbany," New YorkDaily News, 3/20/72

- "2d No Fault BillIs Killed," New,York Daily News,5/12/72

. Have the class readreports of the con-troversy and give theirfindings and opinionsto the class.

. Organize the class intotwo aebating teams -one for and one againstno fault, and debatethis problem. Invite alawyer to judge thedebate.

. Examine the "StatutoryNo Fault Benefits"chart on page 64 andthe Insurance Informa-tion Institute explana-tion on pages 60-63 foran explanation of basicplans. Which plan seemsbest? Why?

63 56

SOURCE

"Automobile In-surance ... For WhoseBenefit?" p. 85:

"The compulsory,minimum automobileinsurance should, ingeneral, provide fullcompensation for thenet economic loss ofaccident victims."

. "Ahead: A New Systemof Auto Insurance?"

'U.S. News & WorldReport

. "Automobile In-surance ... For WhoseBenefit?" p. 110:"Taking compulsorypersonal injurycoverage and compul-sory property damagecoverage together,the average premiumunder our proposalshould be about 56%less than it is underthe fault insurancesystem."

. "Insurance: A TimidStep Toward Reform,"Time, 3/29/71, p. 82

. Wise, Paul S., Presi-dent, American MutualInsurance Alliance,"The Case For/AgainstNo Fault Auto In-surance," PopularScience, 1771,-1T 57

. "The Fault With NoFault:statement ofAllstate InsuranceCompany, before theNew York State JointLegislative Committeeon Insurance Ratesand Regulation,5/21/70, Rochester, N.Y.

WHAT ARE THE OBJECTIONS TO NO FAULT INSURANCE?(Background Information)

A number of powerful groups are united in opposition to no fault in-surance. Pupils should understand the basis of these objections beforemaking up their minds on the issue. Some of the opponents' views are quotedbelow and references are made to others.

. Committee on Automobile Accident Reparation, Albany County BarAssociation:

"No-Fault Insurance is not merely a proposal for dealing witha difficult problem. It is a new philosophy for governingman. It eliminates a person's responsibility for his own actsand limits an injured party's right to recompense. It limitsthe right of a party to a trial by jury as set forth in theSeventh Amendment of the United States Constitution. No-FaultInsurance concentrates on the reduction of the premium ofcompulsory automobile insurance and on rapid payment for neteconomic loss, but it does nothing to cut down automobileaccidents. It does not reward the safe driver. It does notdeal at all with reduction of the cost of repairing damagedautomobiles or repairing injured bodies. It deals in cheappremium (at least for the first year or so) and quick paymentof out-of-pocket expenses. Whether the people of the State ofNew York are ready to abandon a philosophy of Government whichholds that a person should be responsible for his acts, for asystem of Government that compensates the innocent and guiltyalike; whether they wish to abandon the Judeo-Christian ethicfor the sake of some certain, swift payment; whether they wantto sacrifice justice to expediency is something that they shouldnot have to decide without being fully informed."

. Marvin E. Lewis, president of the American Trial Lawyers Associa-tion, was quoted in the Albany Times Union, 9/20/71,as follows:

"No-fault insurance is a confusing, misleading and popularly-promoted label for more than 100 different proposals and plans.The no-fault label has the inherent capacity to deceive the public."

"Being against no-fault auto insurance is like being againstmotherhood." "The public has been sold a bill of goods."

"No-fault would close the doors of justice to the citizen anddeprive him of his fundamental right to recover from human lossessuch as pain and suffering, and reward the guilty at the expense ofthe innocent."

Seymour L. Colin, president of the New York State Trial LawyersAssociation, quoted in the New York Times, 9/3/71, said he was:

"not in favor of any no-fault Tegislation, proposed or passed,except such legislation as does not deprive people of their rightto recover fair compensation through suit or arbitration."

"Whatever changes are made in the insurance system, it should beclearly understood that this country will go on paying too high aprice for auto insurance until something is done about the excessivecost of auto crashes."

57 64

. For further reading see:

- - "Eye-for-Eye Insurance Plan Opposed"Knickerbocker News, 3/17/72

"Stop, Look, and Listen"Barron's Weekly, 1/17/72

Statement by Alfred J. BohlingerOn behalf of the National Association of Independent Insurers

before the joint legislative committee on insurance rates,

regulation,and recodification of the insurance law, Albany, N.Y.,

3/1/72

58

65

On one hand And on the other

Critics say:

A no fault system will encourage .

reckless and careless drivingbecause these drivers will notbe held financially accountable.

It's unfair to eliminate the right .

to sue for pain and suffering.

. No fault objectives could bereached by increasing medicalpayments coverage and broadeningit to loss of income.

Under the present system, lia-bility premium rates are gearedto a driver's accident potential.Young, single men, for instance,pay relatively high rates becausethey are involved in proportion-ately more accidents. In a nofault system, the burden ofhigher rates would be shifted todrivers with large familiesbecause their claims are likelyto be larger than those of otherdrivers.

Proponents say:

Reckless drivers should be punishedthrough the traffic laws, not theinsurance system.

Pain and suffering cannot bemeasured objectively. Including itas a compensable cost invites ex-aggerated claims. To some extentpain and suffering would be coveredby payments for dismemberment, dis-figurement,and loss of income.

Increasing benefits would raise in-surance buyers' premiums withoutgetting at the root of the costproblem - the fault liabilitysystem.

. That may not turn out to be true.Under the new system, companies maydiscover that people with largefamilies are entitled to low ratesbecause they drive more cautiouslywith children in the car, or tendto stay home and use their carsless. And the big family will getmore protection for its moneybecause its injuries will alwaysbe covered.

. Both opponent and proponent views are quoted from "The Row Over 'NoFault' Auto Insurance," Changing Times, 5/69.

59

66

EXISTING AND PROPOSEDAUTO INSURANCE SYSTEMS

Insurance Information Institute,

PLAN STATUS

BENEFITS UNDER BASIC PLANKIND OF SYSTEM Modkal, funoral 01 lifor Eamon* Limos

Tortiinhility4ys'em

Existing system inmost slates.

Third-party fault system (personalinjury and property damage), withadded first-party no-fault coverages.

No statutory limits" No statutory hmtli.

ItssiPrefect ionNon

Proposed byProfessors Robert F.Keeton and leffmyO'Connell

First-party no-fault (personal in carand property damage). TON 111171114above plan benefits.

Up to 510.000 (includingother economic loss).

Up to si0,030 pncludinemedical. etc.,.

UniformMotorVehicleInsuranceAct

Introduced in U.S.Senate Sept. 14.1970,by Sen. Philip A. Han(DMicn.j AmendedJuly. 1971.

injuryFirst -pally no-fault (personal Injuryand damage to property other than carsin use). Compulsory.

Unlimited as to reasonableand necessary medical,hospital and rehabilitationcosts and incidentalexpenses.

Up to 51.000 monthly, forloss of earnings afterincome or forstasis ing dependents ofsage earners Extra espemefor personal service,.

CompletePersonalProtectionPlan

Proposed by AmericanInsurance Asvxiation.

Firstpariy no-fault system (personalinjury and -j .njury an property anugej.Compulsory system. (Auto physicaldamage optional).

Medical unlimited.Funeral, SI.000.

Unlimited. except sageloss limited to S750 permonth.

CuarantectlProtectionPlan

Proposed by AmericanMutual InsuranceAlliance

Insurance portion blends liability andno-fault coverages (personal injury;full third-pally 'WAR), for propertydamage); requires arbitration aclaims under 5.1.000.

Mandatory 530,000 minimumfor first-party medical.HO" limits optional. Tianaction retained for fullmedical expenses.

Mandator. WOWminimum for meow tomUp to SI: a Jay for nomamp earners Roth retainright to tort action for lulleconomic low,.

DualProtectionPlan

Proposed b NationalAssociation ofIndependent Insurers.

Limited firstparty .no-fault (personalinjury) Preserves right to tort actionfor damages in excess of policy limits.Provides for subrogation andarbitration in immediate pay casesinvolving at-fault thirdparty.

LI. to 52.000 r person,Up _,. . 4es __. and'w in'"ci- " Pr' 4"funeral expenses. Excesslimits coverage mailable asoption.

Up to S6.000 for safe loss.up to S4,560 for writer.others me performed by .IIIinjured nonsage earnerExcess limits ,mciaticmailable a, option

Maimachusette"CompulsoryPersonalInjuryProtection" Law

In effect since ha. 1.1971.

Limited firstparty no-fault (personalinjuryproperty damage opoonal).Optional deductibles of 050. 5500.$L000 or $2.000 on no-fault benefits.Compulsory program.

Up to 52.000 medical andhospital expenses.

1. p to 75% loss of a alle,and Wary

New YorkStateInsurance Plan

Not passed in 1971.Probable reintrodatiornext session.

Combines elements of firstparty no-fault (personal injury and damage. tonon-automatist property) and strictliability. Compulsory system.

.--

No statutory limits.Medicalhospital andrehabilitation not compenoiled from other sour:es

t nhooteJ net income losscompensation.

60

REMARKSPain and Suffering Now Payable Maximum Payment

No statutory limits.Lump sum, except forvoluntary advance paymentsby insurers.

No statutory limits (exceptdeath benefits limited insome states).

Insurance is primary.

None. Policyholder maysue for claims over S5.000. Monthly as accrued. 510.000 per person.

5100.000 per accident.

No-fault benefits are excess overbenefits from other sources.Primary coverage optional. Tortexemption applies to first 55,000of pain and suffering, 510,000of other damage.

Optional coverage.As accrued. Benefits unpaid30 days after proof of lossbear interest at 2% a month.

Unlimited.

No-fault benefits subject toreduction oy amounts of benefitsfrom other insurance planswhose benefits are primary.Provides immunity from tortliability except for driversinvolved in criminal conduct.

None. As accrued. Unlimited.

Insurance i primary . .%soldanceof duplication of benefitsrecommended. Pius idesimmonity from tort liability

Barred unless hospital andmedical expenses exceedSI,000. or in cases of seriousdisfigurement, dismember-ment or permanent loss of abodily function.

As accrued for first-partybenefits. Lump sum forliability benefits, subject todeduction of voluntary ad-vance payments by insurers.

No statutory limits, exceptdeath benefits limited insome states, and as indicatedfor pain and suffering.

. .First-party benefits deductedfrom third-party settlement.

Insurance is primal). subject toreduction by amount ofworkmen's compensationbenefits. Lawsuits permitted

For minor injuries, up to50% of medical and hospital',sperms to 5500, up to100% if over 5500. Right tosue in serious injury, death,of exceptional cases.

As accrued, subject totwo-week waiting periodf,,r lost wages and ram-bursement for servicesotherwise performed by aninjured non-wage earner.

Subject to policy limits.

when medical or wage lossesexceed plans' limits or asdescribed under "Pain andSuffering."

Barred unless hospital andmedical expenses exceedS500, or in cases of death.dismemberment, loss ofsight or hearing, seriousdisfigurement or fracture.

As accrued. Subject to policy. limits.

Insurance is primary. No barto recover) from collateralsources. Except as indicatedunder "Pain and Suffering,"insured is exempt from lawsuitto extent of no-fault benefits

None. As accrued. Unlimited.No-fault benefits are mess Overbenefits from other sources ofindemnification. Retains tortaction in death eases.

"1111111,

EXISTING AND PROPOSEDAUTO INSURANCE SYSTEMS CONT'D

Florida"PersonalInjuryProfited= "Law

Effective Jan. 1. 1972

Limited fiestparty no-fault (persona! in.jury). Optional deductibles on no-faultbenefits. Bars tort liability on propertydamage under 5550 to cars. Insuranceor other proof of security attuned foeprivate passenger cars. Provides foesubrogation.

Up to 55.000 medical andrelated expenses. 51.100funeral expenses.

100% wage loss and loss ofearning capacity. of taxable85% if not taxable: cansexpense foe personalseries.

IllinoisStatute Effective Jan. I. 1972

Limited first arty no-fault (personalinjury) foe private passenger cars. Pro-sides foe subrogation and or Banes.non of claims of 53.000 or lessinvolving atfault thirdparty. Preservesright to tort action.

Up to 52.000 per personfor medical. hospital andfuneral expenses. Excesslimits cot nage available asoption.

Up to 65% of loss of in.come: up to 512 a day foeservices ordinarily performedby an named non* ageearner. Excess limitscoverage available as°pion.

DelawareStatute

IProvides

Effective Jan. 1. 1972

Combination of firstparty no-faultand thiedpany liability (personal injury.property damage). Compulsory programwith additional get optional.

foe subrogation. .

On fiestparty no-fault basis, up to 510.000 per person.520.000 aggregate for medical expenses. wage loss. extraesperhe foe personal services. up to 5:.000 funeralexpenses. 55.000 damage to nonautomonse property :coverage of auto optional. Deduetibles available.

OregonStatute

Effective Jan. I. 1972Limited firstparty payments (personalinjury) without regard to fault. Coverage

mandator/ in liability policies coveringprivate passenger vehicles.

.. .... . .I p to SJ.UUU medical and

5250

deductible optional.

After 14 days, up to 70'.loss of income or up to 512a day foe expenses foeteal services the injured.person would haveperformed without income.

SouthDakotaStatute

Effective Jan I. 1972Firstparty no-fault (personal injury) asoptional supplement to automobileliability insurance.

p to .. medicalUp 5, 000 cd lexpenses.

Minimum of 510.000 deathbenefits if death within 90days. Up to S60 weekly for52 weeks for loss of income.less 50% If injured personunemployed.

Puerto Rico"SocialProtectionPlan"

In effect.

Compulsory fiestparty no-fault system(personal injury). Gmernmentadministered. Tort liability above planbenefits.

Unlimited services m Gov't.hospitals. Funeral. S500.

up to 55050'. of salaryawnk first year. 525 aweek second year.memberment. 55.000.Death. 55.000.

Saskatchewan.Canada.Statute

In effect since 1946

Firstparty no-fault and minimum535.000 liability (personal injury andproperty damage) compulsory. 5200deductible fiestparty property damagecompulsory.

Up to 52.000 medicalexpenses. Funeral. 5300maximum.

Scheduled death and sue.visors' benefits up to 510.000.Up to S25 a week disabilitybenefits after 7 days. subjectto reduction by amount ofcollateral benefits. Up to54.003 for dismemberment

AUTO INSURANCE SYSTEMS OF ALL OTHER CANADIAN PROVINCES combine firstparty no-fault and personal inju(effective Nov. I. 1971) and Alberta (effective Apr. 1. 1972). Programs are voluntary is other provinces except liability insurance aexcept in Manitoba where 5200 deductible is compulsory. Ontario program is effective Jan. I. 1972.

Nome., 1604 lawmen rabOel le palmy Immo.

G9 62

Barred unless medical andrelated expenses exceed51.000. or in cases of certainfractures, permanent dn.figurement or injury, ordeath.

As accrued. Benefits unpaidwithin 30 days of noticebear interest of 10%.

subje,:t to policy lima,.cccpt jot -,ca.unable'extra espense, tor perconalSCrlleeS.

Insurance is primary, subjectto reduction In amount ofworkmen's compensationbenefits. Right to sue preserved.except insured is exempt fromtort liability to the exteut.ofcertain no-fault benefits.

....

Preserves right to SOC.Except in death or perms-nent injury cases. recoverylimited to 50% of medicaland hospital expenses toS500. 100% of medical andhospital expenses over 5500.

Promptly on proof of loss. Subject to policy limits.m

Benefits payable regardless o(collateral sources, subject to

men'sby amounts of won:-

men's compensation paymentsInclusion of first-party no-faultcoverages required in nonfleetprivate passenger policies.

Retains right to sue. Not specified. Subject to policy limits.

Law recwia liability insuranceof at least 525,000 or rinimunlimits of Financial ResponsibilityLaw, whichever is greater.Right to sue. Insurance primary.

Does not bar right to sue. Promptly after proof of losssubmitted. ctSubject to policy limits.

Except for new no-fault covet-ages, retains present system. Nobar to lawsuits. No-fault bane-fits primary for insured, butmay be reduced by recoveriesfrom collateral sources. Pay-ments to guest passengers maybe excess over other benefits.

Preserves right to sue. Not specified. Subject to policy limits.

Law does not affect automobilephysical damage policies. Nobar to lawsuits. Insurance isprimary, but no bar to recoveryof benefits from collateralsources.

None. Policyholder maysue for claims over $1,000. Weekly payments.

Limited to total of planbenefits. Policyholder maysue for economic loss over52,000.

Lawsuits permitted when lossesexceed $1,000 for pain andsuffering and 52.000 for otherdamages. Benefits deductiblefrom other insurance.

None under plan limits.Right to sue. As accrued.

First -party benefits limitedto sc. edulev. No statutorylimit ior third-party claims.

No-fault benefits are p .maty.but dual recovery not permitted.Plans retain right to cue abovefirst-party no-fault limits.Manitoba and Saskatchewanplans are governmentmonopolies for basic limits;government and private insurerscompete for excess. Privateinsurance in other provinces.

ry and property damage liabilitycompulsory in British Columbia. Manitobacompulsory in Nova Scotia. First-party property damage coverage is optional

63

70

The Statutory No-Fault BenefitsTHE STATUTORY

NO-FAULTCOVERAGES

IN THESE STATES..

Florida Illinois Delaware Oregon Massachusetts Minnesota andSouth Dakota'

V.t09.

Pre

9..`y,: i=2?ti.'ri .

K9I.,a I'-' r2e.2._i- 1

Medical ServicesPays for all reasonableexpenses for medical.hospital. surgical.dental, and funeralservices incurred.

Total recovery formedical services andloss of income orpersonal serviceslimited to 5000 perperson sub ect to thesublimits ownbelow. Funeral ex-pens. , limited to$1000 per person.

$2000 perperson.

Total recovery formedical services andloss of income orpersonal serviceslimited to 210.000per person. $20,000per accident. subjectto the sublimitsshown below. runes-alexpenses limited to$20M Peer Osman.

$3000 perperson,

Total recovery formedical services andloss of income orpersonal serviceslimited to $2000pc:person. subjectto the sublimitsshown below.

$2000 perperson.

Wage Eamer's Lossof Income Paysfor actual loss ofincome due to acontinuous totaldisability.

Included, but limitedto 10011 of loos ofwes income subjectto Fed. Income Taxand 65% of ell otherlost income.

65% of lostincome upto $150 perweek for52 wee ks.

Included.

70% of lostwagesup to$500 permonth for62 weeks.

Included but limitedto 75% of Incomelost less any otherwage continuationbenefits.

Up to $60per week for52 weeksfor the namedinsured only.

Loss of Non-WageEarner's PersonalServices Pays forexpenses incurredfor essential personalservices that wouldhave been performedby the injured person,had it not beenfor the injuries.

Included.Up to $12

r; 11111days." Included.

Upto$12per dayfor 52weeks.

included.

Up to $30per weekfor 26 weeks(52 in S.D.)for the namedinsured only(if not gainfullyemployed).

Accidental DeathPays a lump sumupon death due toinjuries sustainedin a traffic accident.

No provisionin this law.

No provision. (Ifexcess coveragepurchased,"survivor benefits"provided.)

No provision. Noprovision.

No provision. $10,000 forthe namedinsured only.

Damage to insured'sAuto Pays forloss of or damage toInsured's auto due tocollision or upset.Also provides limitedrental reimbursement.

insured's options:1. No coverage,2. coverage onlyif other party atfault. 3. coverageregardless of fault.(2 and 3 includelimited rentalreimbursement.)


insured's options:1. No coverage.2. the traditionalcollision coverage.Rental reimburse-ment optional.

Noprovisionin this law.

insured's options:I. No coverage,2. coverage onlyif other party atfault, 3. coverageregardless of fault.(Rental reimb.optional under 2and 3.)


Damage to Property

%lien MotorPays for

property damaged inaccident invologinsured's motorvehicle.

No provisionin this law,

No provisionin this law,

$5000 peraccident.

Noprovisionin this law.

No .provisionin this law.


Laws not identical, but general coverage provisions similar enough to combine for comparison.*Excess coverage available for an additional $50,000 per person. $100.000 per accident.

EFFECT ON TORTLIABILITY SUITS

Can suits be filedfor damages to:

II

a. A motor vehicle? Only if damage isover $550. or otherpart

Floriday not subjectFr law.

Yes Yes Yes Only againstout-of-Statemotorists.

Yes

b. Property other thana motor vehicle?

Yes Yes Yes Yes Yes Yes

Can suits be filedfor pain andsuffering?

-

Only if medicalexpenses exceed$1000 or perma-nent or seriousinjuries aresustained.

Yes. but limitedto 60% of first$500 medical

Vliteroefsnai medicalexpenses above$500 (limit doesnot apply if per-manent or seriousinjuries sustained).

Yes Yes Only it medical

rbrOnsirsirceedpermanent orserious injuriesare sustained.

Yes

Are bodily injury andproperty andand uninsuredmotorists coveragesstill needed?

Yes Yes Yes Yes Yes Yes

This chart was prepared from the latest information available sued yourself) and thus should not be considered as being fullyat press-time. It is intended only to show the Information we feel descriptive of all features (such as, but not limited to deductiblesyou most want to know (Le., how much you can generally available. waltingprzilods. policy exclusions or conditions) of anycollect from USAA and what sestrictions may have been of the No-Faultplaced on your tort rights to sue a negligent third party or be .. -1,..

National Association of Independent Insurers30 West Monroe Street, Chicago, Illinois 60603

64


IS NO FAULT ANANSWER TO AUTOMOBILEINSURANCE REFORM?

. Proponents claimthat no fault in-surance would solvemany of the problemsnow facing both theindustry and theconsumer.

. Some no fault plans,however, still leaveunresolved problemswhich must be facedbefore consumerswill be totallysatisfied.

. Objections to nofault have alsobeen raised.

WHAT HAPPENED TONO FAULT LEGISLA-TION IN THE 1972SESSION?

. Although GovernorRockefeller hadconsidered nofault automobileinsurance to be theprimary consumerissue before the1972 Legislatureand had made anunprecedentedappearance tospeak on its be-half before the

. Set the class up as aState Legislature. Onestudent will act as theGovernor; one group willbe proponents of the nofault system, the other,opponents. Have themargue the case anddecide whether topass or reject an in-surance system similarto the New York Plan.

. Would total, substantial,or limited no fault besatisfactory to students,as policyholders of thefuture?

. What proposals would theymake to improve any ofthese plans?

. Have each student listnecessary points to beincluded to make anyplan satisfactory forhim.

. Have students researchthe controversy over nofault insurance asreported in newspapersfrom January 1972 untilthe Legislature adjournedon May 12.

. Arrange for a panel

discussion on the pro-visions of the two billswhich epitomized theconflicting viewpoints

65

. "This Is No Fault,"Fireman's FundAmerican InsuranceCompanies, SanFrancisco, California

. Stewart, Richard E.,"The Faults of FaultInsurance," Washing-ton Monthly Company

. No Fault InsuranceHope Buried in StateAssembly," New YorkTimes, 5/12/72

. "No Fault Auto In-surance Bills Die inLegislature," AlbanTimes Union, 5

UNDERSTANDINGS

committee hearingon this matter,no action was takento change the lawin this regard.

. Since no fault in-surance will con-tinue to be aconcern, consumersshould arm them-selves with thefacts to make anintelligent decisionon this matter.

3


of legislators:- On the one hand was

the bill introducedby Senator Thomas W.Laverne, which hadthe support of mostsenators as well asthe indirect supportof trial lawyers.The Laverne bill re-tained the unlimitedright to sue fordamages.

- The opposing bill

which would havebarred lawsuits forinjuries not definedin its provisionsas "serious" wasintroduced by SenatorBernard Gordon.

. What concessions didSenator Gordon make toattempt to reach acompromise?

. Why do students feel thatthe Gordon bill was not

successful?

. Undoubtedly the no faultproposal will be broughtup in succeeding legis-lative sessions. As one

of its sponsors said:"This bill may be dead,but the issue is notdead."With the right to votegiven to those of 18years of age, it isprobable that manystudents now in schoolwill be voters by thetime this legislationis next considered. Whatposition do they feelthey should take in thismatter?

66

SOURCE

. The original no faultbill was estimatedby its supporters assaving $300 milliona year to consumers.

. The amended no faultbill was estimated tosave consumers $50million to $60 million

a year.

. Serious injury wasdefined to mean "apersonal injury whichresults in death, dis-memberment, significantdisfiprement,permanent loss of useof a body organ,member, functionor system; or dis-ability rendering thevictim for not lessthan 15 days in-capable of performinghis principal activityand a substantialportion of his otherdaily activities."

. Supporters of Senator

Laverne's bill in-dicated that the "in-alienable" right ofconsumers to suewould have been deniedby the proposedGordon bill.

. "Senator John Hughesof Syracuse claimedthere is 'great mis-understanding aboutthe Gordon no faultproposal'. He assertedthat 'there is noevidence of greatsuccess in any statethat has tried no

fault insurance.'"Albany Times Union,5/10/72

SUMMARY

With ever-rising premium payments, with little or no compensation forsome victims and overpayment for others, with delays and unfairness, itseems time to explore other ways of handling claims.

Proposed Solutions to the Problem

A number of authorities in the field of law and the field of insurancehave proposed solutions to the problem. Attorneys, many of whom have athriving business in automobile damage cases, have been accused, fairly orunfairly, of preventing any changes in the present fault system. On theother hand,some of the leaders in asking for a better system have been fromthe legal group.

Massachusetts has passed legislation which in effect calls for alimited no fault system to settle claims up to the amount of $2,000. Sincethe Massachusetts law also provides for a reduction in premium costs, someof the leading insurance companies say the costs of doing business in thatstate are too high and threaten to stop writing insurance in Massachusetts.

The New York State Insurance Department has made a report to theGovernor outlining a proposal with seven main features. The claims made forthe proposal are these:

. It is a system to compensate victims for losses suffered in automobileaccidents, rather than to shift costs according to fault.

. It compensates the victim for all of his net economic loss.

. It requires motorists to buy insurance, but only to cover thoselosses not repaid from other, more efficient sources. (For example,if health insurance is carried, payments could come from thatsource.)

. It allocates the cost of compensating for such losses, as betweenprivate and commercial vehicle owners, according to the relative easewith which they can handle that cost.

. It imposes special cost burdens on drunken drivers and otherparticularly obnoxious categories of motorists.

. It leaves room for voluntary arrangements for coverage beyond whatis required.

. It uses special sanctions to make sure insurance companies pay claimspromptly and fairly.

While progress toward a fairer system may take many years, it isnecessary to find some better way to handle the growing problem of faircompensation for automobile accidents. Informed students, it is hoped,will be heard, as the industry, the states, and the Federal Governmentconsider and adopt automobile insurance reforms.

BIBLIOGRAPHY

Books

Black, "Law Dictionary," 4th ed., West Publishing Co., New York

Constantin, Robert W., "Sue or Settle," Crown Publishers, Inc., New York,

1968

Department of Transportation Automobile Insurance and Compensation Study,

"Price Variability in the Automobile Insurance Market," U.S. GovernmentPrinting Office, Washington, D.C. 20402, 1970

. "Public Attitudes Toward Auto Insurance," U.S. Government Printing--Mice, Washington, D.C. 1970

Fisk, McKee, & Snapp, James C., "Applied Business Law," South-WesternPublishing Co., Cincinnati, Ohio, 1960

O'Connell, Jeffrey, "The Injury Industry -surance," Consumers Union, Mount Vernon,

Stewart, Richard E., "Automobile Insurancereport to Governor Nelson A. Rockefeller,Department, New York, 1970

and the Remedy of No Fault In-New York, 1971

.. For Whose Benefit?" A

State of New York Insurance

Magazine Articles

"A Weak Push Toward No-Fault," Business Week, McGraw-Hill, New York,3/27/71

"Auto Insurance - No Fault in the Future?" Everybody's Money, Credit Union

National Association, Madison, Wisconsin, Summer 1971

"Did You Catch These Pointers?" Changing Times, Editors' Park, Maryland,

August 1971

"How to Buy Auto Insurance Today," Changing Times, Editors' Park, Maryland,July 1971

"Insurance - A Timid Step Toward Reform," Time, New York, 3/29/71

"Insurance: The Road to Reform" Consumer Reports, Mount Vernon, New York,

5/71

Lazarus, Simon, "No-Fault Default," The New Republic, Marion, Ohio, 4/17/71

"The Case For/Against No-Fault Auto Insurance," Popular Science, New York,1/71

"The New 'No-Fault' System," Changing Times, Editors' Park, Maryland,July 1971

"The Row Over 'No Fault' Auto Insurance," Changing Times, Editors' Park,Maryland, May 1969

68

Newspaper Articles

Cole, Robert J., "Personal Finance," New York Times, New York, 9/30/71

Marks, Seymour, "Bias in Auto Insurance," Long Island Press, 1/20/70

. "Insurance Reforms?" Long Island Press, Jamaica, N.Y., 1/23/70

. "'No Fault' Insurance,A Boon for Drivers?" Long Island Press, Jamaica,N.Y., 1/21/70

. "Today's 'Tender' Cars Cost More to Insure," Long Island Press,Jamaica, N.Y., 1/22/70

Morris, John D., "No- Fault Idea Advances; Extent of Gain is Disputed," NewYork Times, New York, 10/3/71

Prial, Frank J., "Cars Called Youths' Biggest Peril," New York Times,New York, 9/18/71

Pamphlets and Papers

"Ahead: A New System of Auto Insurance?" U.S. News & World Report,Washington, D.C., 4/28/69

"Awareness of and Attitude Toward a New Kind if Automobile Insurance,"Research Findings Prepared for Insurance Information Institute on Behalfof American Insurance Association, New York, 11/68

Colin, Seymour L., Statement Submitted by Mr. Colin, president, New YorkState Trial Lawyers Association, at the Hearings of The Assembly StandingCommittee on Insurance, Wednesday, 9/8/71, at the Queens County BarAssociation, Jamaica, N.Y.

Dennis, Lloyd B., "Fortunes of Auto Industry," Editorial Research Reports,Washington, D.C., 7/27/66

Hart, U.S. Sen. Philip A., "The Case For No-Fault Insurance," Moneysworth,New York, 3/8/71

"Insurance Industry Studies Crash-Cost Strategies," Insurance Institutefor Highway Safety, Washington, D.C., 6/16/70

Jaffe, Herb, "No-Fault Car Insurance Premiums Could Drop as Much As 56 pct.,"Reprinted from the Star-Ledger, Newark, N.J., by the American InsuranceAssociation, New York, 2/22/70

Law Memo 593, Mass. Regular Session 1970, "Motor Vehicles - (1) Renewal ofPolicies; (2) Suspension of Insurer's License For Refusal to Issue MotorVehicle Liability Insurance," reprinted by American Insurance Assn.,New York

Margolius, Sidney, "Auto Insurance: The Need for Reform," published by

the AFL-CIO American Federationist, 12/67

McNaughton, Donald J. & Riley, Robert K., "A Review of the Automobile In-

surance Assigned Risk Plan in New York State," printed by State of New

York Department of Motor vehicles, May 1969

"No-Fault Auto Insurance," printed by The Travelers Insurance Company

"Reducing Traffic Injuries Through Improved Auto Design," printed by U.S.

Department of Health, Education and Welfare, National Center for Urban

and Industrial Health, Injury Control Program, Arlington, Virginia 22203,

1968

"Report of Special Committee to Study and Evaluate the Keeton-O'Connell Basic

Protection Plan and Automobile Accident Reparations," printed by American

Insurance Association, New York, 9/9/68

Statement of T. Lawrence Jones, president, American Insurance Association,

for Hearings on Automobile Insurance by The Senate Antitrust and Monopoly

Subcommittee, 12/15/69

Stewart, Richard E., "The Faults of Fault Insurance," Washington Monthly

Company, 1150 Connecticut Avenue, N.W., Washington, D.C. 20036

"The Auto Insurance Story," Let's Look at the Record;, published by

National Association of Independent Insurers, Chicago, Illinois, 1971

"The Complete Personal Protection Automobile Insurance Plan," developed by

American Insurance Association, New York, 1969

"The Fault with No-Fault," statement of Allstate Insurance Co., by Donald

L. Schaffer, vice president and general attorney, before the New York

State Joint Legislative Committee on Insurance Rates and Regulation,

5/21/70, Rochester, N.Y.

"Traffic Accident Experience in the United States," Insurance Information

Institute, New York, April 1971

Worsnop, Richard L., "Auto Insurance Reform," Editorial Research Reports,

Washington, D.C., 1971

1941 70

, r-1,..,..annghouse

DEC4 1972e -. -

( -,' ti-...,..4 on

Printed by the University of the State of New York Press

36915

DOCUMENT RESUME ED 068 845 The Consumer Looks at ...DOCUMENT RESUME ED 068 845 AC 012 997 TITLE The...

Documents

Transcript of DOCUMENT RESUME ED 068 845 The Consumer Looks at ...DOCUMENT RESUME ED 068 845 AC 012 997 TITLE The...