Comparative Fault and Its Impact on Insurance in North Carolina

 The most important thing that people want to know about the new comparative fault law is whether it will drive up automobile insurance rates for drivers. North Carolina senators requested a reliable breakdown of the issues to determine the effect that implementing this new law would have on insurance premiums for the citizens of North Carolina. In response, the North Carolina Advocates for Justice hired an independent firm, Pinnacle Actuarial Resources, which specializes in analyzing the insurance industry to study other jurisdictions that have made the switch from contributory negligence to comparative fault.

The study was done in the contiguous comparative negligence states of South Carolina and Tennessee. The data indicated that switching from contributory negligence to comparative fault did not result in any substantial increase in insurance rates. https://askcompetentlawyer.com/ In fact, the study suggested that since those states switched to comparative fault, North Carolina and Virginia rates have increased at a faster pace under their contributory negligence scheme. South Carolina converted from contributory negligence to comparative fault in 1991 and Tennessee followed in 1992. Both states had higher insurance rates than North Carolina before they switched. "After the change, the gap between South Carolina and North Carolina closed from 29.4 percent in early 1991 to 2.6 percent in early 2009. The difference between Tennessee and North Carolina fell from 19.4 percent to 5.4 percent. After moving to comparative fault, according to Pinnacle Actuarial Resources, increases in premiums slowed significantly in South Carolina and Tennessee while North Carolina's contributory premiums climbed at a steeper rate."

However, insurance companies continue to warn consumers that insurance rates will surely rise if comparative fault is adopted. The insurance companies base this on the logic that comparative fault will allow for more lawsuits to be filed that are currently not possible under our contributory negligence regime. More lawsuits filed means more money paid out by insurance companies, meaning higher insurance premiums for everyone. EPIC Consulting LLC conducted a study that was completed in February for the N.C. Rate Bureau, a nonprofit entity serving the North Carolina insurance industry, where the actuaries found data to support this contention. The actuaries reported that a shift to comparative negligence law in North Carolina could increase the number of bodily injury claims by approximately 16.6 percent.

In the end, it is important to remember who is conducting these studies and why. Both the proponents and the opponents of the bill have a stake in the game it's up to the people of North Carolina to decide what's best for them as citizens of this state.