Driver B has a no-fault policy with tort replacement coverage. Both drivers collect economic losses from their own insurer. Driver B can sue Driver A for economic losses over B's own policy limit. Also, Driver B can collect non-economic damages from his own insurer, but not from driver A's insurer. The savings are generated through reduced transactions costs, a result of the injured party's ability to collect pain and suffering compensation from their own company rather than suing another.
Fewer lawsuits mean less attorney fees and court costs.
Still in the drafting stage, it is expected that the proposed legislation will be introduced when the Legislature re-convenes in Fall 1997. Mayor Rudolph Giuliani's Task Force on Insurance Rates, chaired by NYC Consumer Affairs Commissioner Jose Maldonado, concluded that New York City residents have been overcharged for the comprehensive portion of their auto policies while auto thefts in the City have dropped significantly. Consequently, the Mayor announced that New York City has sued seven major auto insurers seeking millions of dollars in refunds to policyholders. The New York State Insurance Department has taken a defensive stance with regard to the Mayor's allegations, stating that auto theft is only part of the computation of comprehensive rates and that such rates have gradually been dropping. The Bill, SB 656, makes the post of Insurance Commissioner an elected position and, among other sweeping changes, creates a consumer watchdog group to monitor the industry.