Insurance Firms Propose 'No-Fault' Driver's Policy

The American insurance Association has proposed a radical modification of automobile insurance policies based on a system developed by a Harvard Law School professor.

The plan, devised by Robert E. Keeton, professor of Law, and his colleague, Jeffrey O'Connell of the University of Illinois, centers around a "no-fault" principle. With such coverage, a person injured in an automobile could collect whether or not he were responsible for the accident.

The "no-fault" principle guarantees protection in all cases, and removes the need for court litigation. Currently, a person injured in a crash must prove negligence on the part of the other driver to collect for damages. A driver must carry additional insurance if he wishes to collect when he is at fault.

45 Per Cent Cut

Keeton estimated that his plan would have cut average premium costs by 15 to 25 per cent. According to the Association, whose members write more than one-third of all private auto insurance contracts in the United States, savings of up to 45 per cent would be possible. The Keeton-O'Connell plan originally covered policy-holders up to $10,000. Under the new proposal, coverage would be virtually unlimited.

O'Connell said he found it "exciting and refreshing that people have begun to see the need for insurance reform. I was very happy to see the association incorporate so many of our ideas." He expressed confidence that the "no-fault" system of auto insurance would be in effect in several states within a few years, and added that Massachusetts would probably be among the first.

Highest Rates

Massachusetts is now one of the three states in which liability insurance is compulsory. Both the premium rates and the claims rates are among the highest in the nation.

The Keeton-O'Connell plan was up before the Massachusetts legislature in August 1967. It passed in the House of Representatives by a large majority but was defeated in the Senate after Massachusetts lawyers applied pressure against the bill.

Neither Keeton nor O'Connell worked directly with the association in formulating the proposal. Their ideas on auto insurance were published in their book, After Cars Crash, written after a three-year study.