Colorado Dropping No-Fault Insurance

By Gary Mogel

NU Online News Service, May 9, 2:37 p.m.EDT?Colorado has enacted legislation that will end itsno-fault system for automobile injury compensation.

Effective July 1, a tort system will go into effect whereinjured parties have an automatic right to sue for damages. Themeasure that was signed into law on May 2 by Republican Gov. BillOwens (H.B. 1188) eliminates a no-fault system that insurers saidwas too expensive due to overly generous benefits and thresholdinjury level requirements that were too low to prevent lawsuitsseeking additional damages.

Under no-fault, each driver's auto insurance coverage pays fortheir injury no matter who is judged at fault. The aim of suchprograms is to reduce litigation.

"Medical costs and premiums were high in part because of thewide range of health care providers, which included aromatherapists and faith healers," noted Jeff Brewer, a spokespersonfor the Des Plaines, Ill.-based National Association of IndependentInsurers, which backed the tort bill.

Drivers in Colorado pay the eleventh-highest auto insurancerates in the U.S., and the average no-fault premium increased 80percent over the past two years, according to the NAII. The revisedlaw is expected to result in premium savings of approximately $176per vehicle.

Colorado's effort to revise its automobile injury compensationsystem had originally taken the form of a bill designed to changeflaws in the no-fault system, according to Michael Harrold, NAII'ssenior director, state government affairs.

He said legislators developed the tort legislation afterdeciding the no-fault system was beyond saving

"The no-fault system had become so amended and diluted over timethat it could not be reformed," said Mr. Harrold. "Too many hadstakes in it; there were too many hands in the honeypot." Hementioned trial lawyers, chiropractors and massage therapists asamong those with "stakes" in the no-fault system.

Mr. Harrold does not see a general trend in the states toabandon automobile no-fault in favor of a tort system. He pointedout that Colorado had serious flaws in its particular system forcompensating auto injuries that needed to be addressed.