Car Accident Newsroom

Several Studies Have Estimated That The Adoption Of No Fault Auto Insurance Increased Fatal Accident Rates

Previous empirical work in this area has yielded contradictory findings. Several studies have estimated that the adoption of no-fault auto insurance increased fatal accident rates; one study claimed rates would rise by as much as 10 percent annually. Others have drawn the opposite conclusion. The confusion surrounding this issue arises from differences in the years (the periods around or following the implementation of no-fault) and countries the studies analyzed (including Australia, New Zealand, and Canada, as well as the United States) and from important differences in their empirical methods.

None of the previous studies used data that span the years in which states first implemented no-fault laws (1971 to 1976). Consequently, these studies are open to the criticism that they failed to control adequately for characteristics correlated with both the adoption of no-fault and the fatal accident rate. States that adopted no-fault auto insurance in the 1970s were not a random subset of all states; they adopted no-fault for a reason, and that reason could be correlated with fatal accident rates in those states.

The RAND study compares differences in fatal accident rates between tort and no-fault states both before and after the 1971 to 1976 period of no-fault implementation. In both tort and no-fault states, fatal accidents per vehicle miles traveled (VMT) fell steadily over the study period 1967 to 1989 (see the figure). These fatal accident rates fell particularly sharply between 1967 and 1978, probably because of factors such as greater seat-belt use, declining rates of drinking and driving, and heightened vehicle and road safety.