Fill 'Er Up with No-Fault, Please

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There's a way to fix the auto-insurance mess. And in many states it's now such a mess, and people are so upset, it could conceivably lead to an entirely new system, one designed to serve the public rather than the attorneys and insurance agents. You could hardly design an auto-insurance system worse than ours. With minor variations, it works the same in every state, and it favors only three groups:

-- Trial attorneys (no state has true no-fault auto insurance).

-- Insurance agents (many states actually have laws forbidding group auto policies).

-- That small subset of accident victims lucky enough to be injured by millionaires, when it can be proved that the millionaire was the one at fault.

Under the current system, about 40 cents of every auto-insurance dollar goes toward selling policies or administering claims, not for fixing cars or compensating the injured. Nearly all that wasted money could be saved. Virtually every disinterested party who looks at the system -- from the young law student Richard Nixon in 1936 to the considerably less conservative Senator Daniel Patrick Moynihan of New York decades later -- concludes the same thing: the system stinks. It could be radically improved.

A sensible, efficient program would save billions of dollars in two ways. It would, first, all but eliminate sales costs and, second, all but eliminate legal fees.

Why sell insurance one policy at a time when we require everyone, by law, to have it? Imagine the added cost if we had to sell Social Security insurance one policy at a time. Or if we outlawed the sale of group health insurance. Or if we required everyone to contribute to the defense budget -- as in effect we do -- and then created a special sales force to sign everybody up.

More than 15 cents of each auto-insurance dollar is spent signing people up. (And lots of people don't sign up, pushing onto the rest of us the cost of any damage they do.)

Everyone should be covered automatically. Auto-insurance "premiums" should be added to the cost of gasoline. It would come to about 50 cents per gal., but there would be no other auto-insurance premiums to pay. You would be fully covered, after a $500 deductible. Collecting the premiums automatically this way would save a fortune in selling and administrative costs. And it would end the problem of people driving uninsured.

If we want to penalize young drivers for being accident prone (But why? They'll get older -- it all evens out), we can do that automatically too. Just include a surcharge on their driver's-license fees. Penalize city dwellers for their higher rate of claims? Sure, but do it automatically, by basing the amount of the deductible on the place the accident occurs: higher in cities, lower in the country. (This would also foil urban drivers who cheat by registering their cars in the boondocks.)

Gas guzzlers would pay more than others for insurance, which would encourage the purchase of efficient cars. But if that's deemed unfair to big-car drivers, evenhandedness could be restored through a small adjustment in the automobile-registration fee.