No-one wants to get in a traffic accident unless they are committing a crime or interested in an insurance fraud. Almost everyone drives around fairly defensively, hoping that any damage coming their way will be "just a scratch" in both the paint and the skin. Yet there were more than 5 million collisions recorded in the US in 2005 (and no-one knows how many unrecorded). When you start adding up the costs from each accident, you're looking at the loss of pay by the injured, their expenses, copayments and deductibles, the loss of their productive labor by employers and their uninsured costs, the medical expenses, the cost of repairing the vehicles or their fair value, the cost of repairing damage to public property, and all the administrative and legal costs and expenses incurred in dealing with the consequences. This is a lot of money. Traffic accidents are a very expensive business, particularly for hospitals and health care professionals who can struggle to recover the costs of treating the injured. To deal with the potential losses to everyone involved, there are two systems of insurance. One is called "no fault" where the people injured recover compensation from their own insurers regardless of who was to blame. The other is called the "tort system" where people sue each other to recover the compensation. The theory says that no fault is better because it avoids all the delays and costs of having to fight over compensation. If insurers value the losses and pay out, they avoid paying attorneys vast amounts of money and premiums fall. Spreading the risk among all the policy holders equally could be used to produce a uniform price for coverage. This is where the politics comes in.

If insurers pay out regardless of fault, they will sometimes pay when there is fault and sometimes when their insureds are completely innocent of blame. It will even out over time. If this was used to produce a single premium, this would be good for the inexperienced and poor drivers because they will all pay less. The good drivers would be upset. Under the tort system, they are rewarded with lower premiums because they do not cause their insurers loss. So even under a no-fault system, insurers adjust the premiums based on their risk analysis. Bad drivers still do pay more than good drivers, but the range of the premiums is reduced.

As it is, the majority of US states use the tort system. It's slow and people are deterred from recovering compensation because they cannot afford an attorney - contingent fees only work for the really big claims. So, when you're looking for auto insurance quotes, the odds are that the premium you pay will be fixed by how good a driver you are and how big the risk you will make a claim. Unless you live in a no-fault state, that gives you a direct incentive to be a better driver because your auto insurance will cost you less.