Final answer:
No-fault insurance systems limit the ability to sue but do not completely eliminate the determination of fault in car accidents. Such systems aim to handle claims efficiently and reduce costs for minor incidents, and states still enforce liability insurance requirements for at-fault accidents. Premium setting by regulators must balance affordability with the potential risk of insurers exiting the market.
Step-by-step explanation:
The statement that states with no-fault insurance programs do not hold specific drivers liable for causing accidents is false. No-fault insurance means that each driver or their insurance pays for their own injuries or damages in the event of an accident, regardless of who is to blame. However, this doesn't entirely eliminate the concept of fault. Rather, it limits the ability to sue for damages and personal injuries, while still allowing for liability and fault considerations in severe cases or under specific thresholds.
In essence, a no-fault insurance system is designed to streamline the process of dealing with claims and to reduce the costs associated with minor accidents, but it does not prevent insurance companies from determining which driver is at fault. States that impose no-fault insurance regulations typically still require drivers to carry liability insurance to cover damages they may cause to others in the event they are found at fault for an accident.
Understanding the fundamental law of insurance is important: the amount paid in claims cannot exceed the total premiums paid to the insurance companies over time. Regulators who set low premiums may face the issue of insurance companies avoiding high-risk drivers or, in extreme cases, withdrawing from the market as seen in examples like New Jersey and Florida.