What Are The Benefits Of Tort Reform?

By Author: Norris Rios
Total Articles: 572
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In Europe there are a lot of safety options for cars that feature both standard and additional equipment. But it's not the same in the US. What are the reasons for that? Some insurance specialists think that it's the lack of tort reform that puts auto insurance in the US into such a situation.

But what is a tort reform in the first place and what it has to do with auto insurance? Tort reform is a general term that refers to a change in the US civil justice framework that is required to provide a limitation of tort litigation and damage. If the reform will be applied then the negative effects litigation has on the economy will be significantly reduced.

In order to make the significance of this reform a bit clearer, here's an example. There are a lot of advanced technologies available for installing into your vehicle. Things like side curtain airbags, special glass, obstacle detection systems, rear camera system, advanced seat belts and numerous other features are very common in the European market and often come as a standard setting for new vehicle. But even if this equipment is made in the US, it is still exported ...
... since it's not that simple to introduce these features into American cars. But why is that so, you might ask? Well, it may come as a surprise for you put if studying the question in details it turns out that our own court system and litigious society are the main reasons for these technologies to have a hard time penetrating the domestic market.

The thing is that installing these add-ons into a typical car automatically gives a possibility for litigation, so it's much simple for the auto dealers and auto insurance providers to neglect these features than try to seek regulations in the legislation. That is why the tort reform is required to modify the legal system itself, and this will allow for new technologies to be introduced to the market faster and much easier than now. Who will want to provide coverage for such an auto when the customer can sue the company for not providing a regulatory base and failing to cover such equipment to the right extent? Of course, no-one.

The U.S. Class Action Fairness Act of 2005 may be a good step towards an overall tort reform since it transferred class-action lawsuits from the jurisdiction of state courts, which eliminates a large part of state litigation. There are two major points that tort reform advocates see in this Act:

1. Lowers the risk of an out-of-state defendant to face excessive verdicts, and reduces the amount of settlements that can be otherwise exceeded by local venues.

2. Introduces new procedures for reviewing coupon settlements, reducing attorney's fees that can be often labeled as "excessive".

This Act thus significantly lowers the litigation amounts and can ultimately lead to a decrease in auto insurance rates. Nevertheless, there's a need in a real tort reform for the auto insurance industry to work more effectively and allow new technologies to be introduced without the risk of court trials from unhappy customers.