Because the business of motor vehicle insurance
is a complicated one that may necessitate the transmittal of a great
deal of information between the parties to an auto insurance policy,
issues related to the duties of an insurer and an insured to give notice
to one another of matters affecting the status of a policy or the
occurrence of events having significance to policy coverage frequently
arise. These issues can include such things as modifications to the
policy itself, the status of the insured with respect to his or her
premium payment obligations, the occurrence of an event triggering
coverage under the policy, or cancellation of the policy by the insurer.
The everyday operation of millions of cars and
trucks on the streets and highways of the United States, and the massive
resulting toll in deaths, personal injuries, and property damage caused
by motor vehicle accidents, have inevitably created a situation in
which the manufacturers and sellers of motor vehicles are implicated as
potential defendants in legal actions seeking compensation for the
losses arising from such accidents. Products liability law, a subset of
the branch of the legal system called tort law, provides the legal
standards for determining the potential liability of motor vehicle
manufacturers and their dealers in such cases. (The principles of
products liability law also apply to non-automotive products, but our
discussion here will focus on the law of products liability as it
relates to motor vehicles.)
Some automobile insurance policies have clauses
that specifically exclude the payment of punitive or exemplary damages
against an insured. Punitive or exemplary damages do not pay for bodily
injuries or property damage. They are awarded over and above payment for
those items. Punitive or exemplary damages are intended to punish the
person who caused the injuries or damage or to make that person an
example to deter others from such conduct.
Requirements for providing or offering
underinsured motorist coverage and uninsured motorist coverage are not
uniform. In some states, it is mandatory for insurers to provide a
specified amount of underinsured motorist and uninsured motorist
coverage; the amounts that are specified may coincide with the minimum
required liability insurance coverage in the state. In other states,
insurers are merely required to make such coverage available to the
purchasers of auto insurance policies. In yet other states, the subject
of underinsured motorist and uninsured motorist coverage is considered
to be a voluntary matter between the insurer and the insured.
No-fault insurance coverage essentially
provides a less expansive insurance coverage than that of the
traditional system, limiting the right of parties to bring traditional
fault-based legal actions and the availability of certain types of
damages that cannot be directly measured in economic terms, such as
damages for what the law terms "pain and suffering," which often make up
the bulk of the damages awarded in a traditional court action. In
return, the no-fault system attempts to indemnify persons who have
suffered personal injury or property damage in an auto accident more
quickly and efficiently than can be accomplished by traditional methods,
and also to reduce costs for all the participants in the insurance
system. No-fault insurance laws often contain exceptions to their
limitations on coverage and allow the bringing of traditional court
actions in cases where serious injuries are involved.
