Auto Insurance Liability System

The compulsory auto insurance law requires the owner or operator to have minimum liability insurance or a guarantee of financial responsibility. This statutory responsibility a precondition before the auto can be licensed or registered. Liability of a negligent or faulty driver for auto accident victims is based on the:

·         Tort liability system:  This is the traditional method of compensating injured automobile accident victims. Legal liability arises for bodily injury or damage to property caused to an injured victim. Under this circumstance, the fault and liability of the negligent party needs to be proved.

·         Contributory negligence law: Damages cannot accrue to third parties if the individual contributes in any way to his or her injury.

·         Comparative negligence law: The financial burden for injury and/or damage to property would be proportionately shared by the two parties to the accident according to their respective degrees of fault.

No –fault automobile insurance enables the insured to claim compensation from their respective insurers regardless of who was at fault. The benefits provided by no –fault liability include reimbursement for medical expenses subject to a maximum limit; other rehabilitation expenses; loss of earnings subject to maximum limit; payment for certain necessary services an  injured person normally performs, funeral expenses and survivors loss benefits due the death of the insured. The benefits do not include payment for pain and suffering. No-fault liability will enable faster and equitable claim payments as the need to establish fault in an accident is not required.