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Under B.P., all motorists would carry compulsory insurance that started paying victims immediately, regardless of who was at fault. The injured motorist, his passengers and any pedestrians he hit would be paid directly by his own insurance company—not the other fellow's—up to $10,000 per person and $100,000 per accident, mainly for medical expenses and wage losses up to $750 a month. Collateral benefits from Blue Cross and other sources, which juries are not permitted to consider when setting awards, would be deducted from B.P. payments; but such collateral coverage would entitle motorists to lower premiums. B.P. would also exclude property damage and payment for pain and suffering, which the authors consider a boondoggle in most cases. Even so, motorists could insure themselves and their families at extra cost against pain, inconvenience and "catastrophe" losses above $100,000.
Out of Business
If a victim's losses exceeded B.P. limits, he could still go to court and sue for damages above $10,000, plus pain and suffering if it amounted to more than $5,000. In turn, a B.P.-insured motorist would be personally liable for paying judgments exceeding those amounts.
Some experts claim that B.P. would cut insurance costs as much as 25%, while compensating 25% more victims. A few top companies favor parts of the plan; Insurance Company of North America has run newspaper ads supporting it. Pessimistic insurance men, however, foresee costlier, slower claim procedures, rising payments to now uncompensated victims—and no letup in accident suits because claims above B.P. would still attract swarms of contingent-fee lawyers. The American Trial Lawyers Association (the negligence bar) does net agree. It seems to fear that B.P. would put them out of business. In fact, after the scheme won the support of 250 Boston lawyers last summer and unexpectedly swept past the lower house of the Massachusetts legislature, a lobby of panicked negligence lawyers killed it in the state senate. The plan is pending or soon to be introduced in the legislatures of California, Connecticut, Illinois, Minnesota, New Jersey, Rhode Island and Wisconsin—in all of which negligence lawyers are fighting it.
Whatever the outcome, debate over the Keeton-O'Con-nell plan ought to spur auto insurers to self-reform. Some big companies have already moved toward nonfault by using an "advance payments" plan: if their policyholder is clearly liable, the victim is immediately paid for his out-of-pocket losses—without being asked to waive his right to any future settlement. The companies report that such claimants seldom sue later on. Other companies, notably State Farm Mutual and Allstate, have cut overhead by using computerized billing and their own low-commission salesmen rather than outside agents. Auto insurers might also save the public millions by selling group policies to companies and unions. Beyond that, they could swing their weight behind safer car design. If auto insurers offered big discounts for cars with easily repaired fenders or sturdy bumpers of uniform height, Detroit might soon find that it would pay to provide them.