has increased at only 3 per cent a year during the same period. This is a
handsome savings in lives. If motor vehicle deaths had increased since
1946 at the same rate as have motor vehicle registrations, the annual
mortality in 1959 would have been more than 70,000 deaths instead of
37,910.
Thus, when fatalities are measured as a ratio against the number of vehicles (or mileage or population statistics), the situation is seen to be steadily improving. In 1940 there were 108 deaths per 100,000 vehicles; by 1959 this ratio had been cut exactly in half, with fifty-four deaths per 100,000 vehicles. This is a 50 per cent improvement. During this same period, the ratio of industrial deaths per 100,000 workers improved only 40 per cent. While this is not a fair comparison in some respects, it does suggest a considerable amount of relative progress.
It is difficult to say, however, whether the relative improvement is attributable to the constructive efforts made by various agencies on behalf of highway safety or whether it is largely inadvertent. One would suppose that driver training courses for the young must have beneficial
TABLE 1
ACCIDENT AND FATALITY FREQUENCY PER 10,000 REGISTERED
MOTOR VEHICL1S, 1940—59
No. of Regis- No. of
tered Motor Accidents Accidents No. of Fatalthe8
Year Vehicles (in (in Thou- 000 FatalitieS ‘
Thousands) sands) e es eh:c es
1940 32,035 6,100 1,910 34,501 10.8
1941 34,472 7,000 2,030 39,969 11.6
1942 32,579 5,200 1,600 28,309 8.7
1943 30,500 4,400 1,440 23,823 7.8
1944 30,086 4,800 1,590 24,282 8.1
1945 30,638 5,500 1,790 23,376 9.2
1946 33,946 6,150 1,820 33.411 9.9
1947 37,360 8,400 2,250 32,697 8.8
1948 40.556 8,200 2,010 32,259 8.0
1949 44,140 7,600 1,720 31,701 7.2
1950 28,601 8,300 1,710 34,763 7.2
1951 51,326 ,400 1,830 36,996 7.4
1952 52,562 9,500 1,800 37,794 7.2
1953 55,567 9,900 1,780 37,955 6.8
1954 57,832 9,550 1,650 35,586 6.2
1955 61,987 9,900 1,590 38,426 6.2
1956 64,412 10,300 1,580 39,628 6.1
1957 66,333 10,200 1,540 38,702 5.8
1958 67,451 10,000 1,464 36,981 5.4
1959 70,596 10,232 1,450 37,910 5.4
•Prlvat43’ owned veNc)ea in the United State.. V
Source: AUtOSIObil. Facts ..nd FtUure. azd Aecide,d Fact..

not been sufficient to finance research on anything like a national scale. In many states it is possible to estimate the number of uninsured motorists and the number of injury cases in whkh financial responsibility has apparently been lacking. But these factors do not fully measure the problem. In addition, data are needed under at least four headings: (1) the amount of financial loss sustained by the victim, (2) the amount of ;iet recovery obtained from the wrongdoer, (3) the time elapsed between date of injury and date of recovery, and (4) the financial dislocation occurring in the injury-recovery time gap. Statistics on these fundamental issues would have to be gathered by personal interviews with a representative nation-wide sample of accident victims, and it is unlikely that this will ever be done. However, riodic local research wiLl probably be continued on a broadening scale, and eventually it should be possible to piece together some picture of the problem’s approximate magnitude.
Data are readily available, of course, on certain important variables in the problem, and these deserve attention for their background value.
1. Fatal Accidents. In 1959 there were 37,910 motor vehicle deaths in the United States. This compares with 34,763 deaths in 1950, 34,501 deaths in 1940. and 32,900 deaths in 1930. There is little doubt but that the long-term trend of motor vehicle deaths shows a small but fairly steady rate of increase, even though for a year or two at a time a decrease in annual figures may be reported. This is a frightful toll, of course. Since 1900, 11,336,000 persons have lost their lives in automobile accidents in the United States, a number more than twice as great as that for all the American lives lost to date in the wars in which this country has engaged. Compared with other causes of accidental death, the automobile accident is by far the most important, accounting for over 40 per cent of the annual accident death total. It causes nearly three times as many deaths as do industrial accidents.
It is illogical, however, to view the problem in terms of total annual deaths alone. To have significance, the number of deaths must be causally related to some function as a variable. This should preferably be the total annual motor vehicle mileage, but the number of registered vehicles is nearly as good and somewhat easier to work with. The crucial question would appear to be whether the number of motor vehicles can be increased each year without a comparable increase in the number of fatal accidents. The answer to this question is reflected in Table 1, which shows that for many years the number of automobiles has been increasing faster than the number of automobile fatalities. The former has increased at about 7 per cent a year since the end of World War II, whereas the latter

AUTOMOBILE INSURANCE
insurance may prove to be inadequate or his contract may be voided by some breath of its conditions. When recovery is finally obtained, the plaintiff’s counsel may take a third of it as his fee.
It is not to be wondered at, then, that many victims are unable or unwilling to begin suit and that others, who do, falter or succumb along the way. It is one thing to acknowledge fault theory as a basis for compensation; it is quite another to ignore its defects in practice. Universal financial responsibility for negligence liability is greatly to be desired, but, as long as the problem is defined in terms of the uncompensated victim, there are other elements to be considered besides that of the uninsured motorist. In any event, it is probably better to express the problem in terms of the objective to be attained (compensation for the victim) than as a means to that end (insurance for the motorist).
Compensation vs. Prevention. Suppose all worthy victims were properly compensated, would an automobile accident problem exist? As that problem has been identified herein, the answer would be No. So, admittedly, the definition is not entirely satisfactory.
Life, health, and peace of mind have value far beyond their economic aspects. Financial compensation, even when adequate, is no substitute fot the mutilation or untimely death of a loved parent or spouse or child. Furthermore, all accidents are destructive of economic values. The victim has to be compensated by someone who, accordingly, loses what the other receives. Compensating victims merely shifts the burden of loss to others. To society as a whole the automobile accident is always a complete loss. This loss can be minimized only by attempts to prevent accidents in the first place. Thus, even if a perfect system were devised for compensating victims financially, an accident problem of another kind would remain so long as death, bodily injury, and property damage occurred in excess of what might be considered normal or unavoidable in the light of existing conditions.
However, since no one can tell just what frequency of automobile accidents may be judged exccssive under either actual or optimum conditions, it is best not to express the problem in terms of accident prevention, important as this obviously is. One may reasonably aspire to a day when all innocent victims will be fairly compensated; it would be absurd to think that automobile usage can ever be made perfectly safe.
Dimensions of the Problem. No one can give even an approximate estimate of the magnitude of the problem because no one knows how many uncornpensated victims there are in the course of a given year. Several limited studies have recently been made in Pennsylvania, California, and Oregon, but results vary from area to area, and funds have

CHAPTER 1

Illsllrauoe aild the Ailtolilobile
PERHAPS NO product of man’s inventiveness has been at once so creative and so destructive of social values as has the automobile. That the good it has wrought outweighs the bad would seem to be an academic proposition in view of its inevitability in modern society. In any event, the theorem is one for the social historian to examine.
The concern of this text and of the insurance institution it describes lies solely with the destructive nature of the automobile and especially with those consequences that for convenience may be collectively designated as the automobile accident problem. The purpose of this chapter is to formulate a simple statement of this problem, describe its nature, measure its dimensions, and explore its financial and legal ramifications as they relate to insurance in general and to automobile insurance in particular.
THE AUTOMOBILE ACCIDENT PROBLEM
Problem Identified. Simply stated, the problem is that of the uncompensated victim of automobile accidents. It is recognized that accidents will occur. People will be killed and maimed and property destroyed and damaged. This is an inevitable cost of putting our culture on wheels. And, while many decry the dimensions of the cost, few would suggest a return to a safer but more primitive mode of transportation.
However, it repels fair-minded men everywhere to think that through the fault of others innocent persons should lose their property or be injured, perhaps even die or be crippled for life, without timely and sufficient financial redress of their wrongs. The fact that such persons may be numbered in tens of thousands each year magnifies this sense of injustice proportionately.
Before becoming emotionally involved, however, we might ask: When is a victim innocent? Who is it that deserves our sympathy? In the pre3

4 AUTOMOBILE iNSURANCE
dominating type of accident involving a victim, on the one hand, and a motorist, on the other, innocence and its opposite, fault, may exist in many different combinations and in varying degrees, ranging anywhere from 0 to 100 per cent (see Fig. 1). For example, all the fault may lie with the motorist and none with the victim (or vice versa); or both may
FIGURE 1
SELECTED COMBINATIONS AND DEGREES OF FAULT IN AUTOMOBILE ACCIDENTS
Degrees of Fault
on the Part of the:
be at fault, but with the motorist more so than the victim (or vice versa); or the fault may be about equal on both sides.
No doubt there are many who for humanitarian reasons would consider all victims deserving of financial relief regardless of the fault-innocence combination. There are others so dissatisfied with the delays, costs, and inequities inherent in the administration of negligence law that they would join the humanitarians in imposing on all motorists an absolute liability toward injured persons without regard to fault.
It must be recognized, also, that injuries can occur in the absence of any fault, or when no cause for action is granted by law, or when the question of blame is snarled beyond unraveling.
But the fact is that we still try to fix responsibility and allocate the costs of automobile accidents according to fault theory and will continue to do so for years to come. In spite of repeated attacks upon it and both statutory and judicial modifications in it, fault theory endures in the legislative mind as a matter of sound public policy. Its champions return repeatedly to its ancient virtues. Let the wrongdoer suffer for his wrongs that he may serve as a deterrent to others and in the future mend his ways. In a democratic society, they claim, there is an obligation on all individuals to exercise due care in all their activities. To remove this obligation, to ignore fault or condone it, whether in the motorist or in his victim, would have adverse effects on automobile safety and accident frequency. In the language of a legal theorist: “The prophylactic factor of preventing future harm has been quite important n the field of torts. The courts

INSURANCE AND THE AUTOMOBILE 5
are concerned not only with compensation of the victim, but with admonition of the wrongdoer.”1
One might object to all this that under a system of insured financial responsibility the wrongdoer does not personally suffer for his wrongs; but this is not the place to debate the point. Suffice it to say that, if responsibility is fixed and costs allocated on the legal theory of fault, then we must logically conclude that the uncompensated victim with whom we are primarily concerned in any study of the automobile accident problem should be one who has been harmed by others and is himself entirely or largely innocent of fault.2
With reference to Figure 1, such victims must lie at point A or—depending on the jurisdiction—somewhere between points A and B (but exclusive of B). Futue mention of the uncompensated victim will therefore refer to those in this range unless otherwise indicated. Those between points B and C (inclusive) in Figure 1, pitiable as their plight may frequently be, lie outside the problem until current legal theories are abandoned—if they ever are.3
Automobile Accident Problem vs. Uninsured Motorist Problem. It is customary to equate the automobile accident problem with the uninsured motorist problem. While this may be justified for practical reasons, the two concepts are not identical.
Even if all motorists were insured, a possibility the realization of which has not yet been demonstrated, the former problem (as defined above) would still exist. The number of uncompensated victims would be diminished, to be sure. But the existence of liability insurance is not in itself a guaranty of prompt and sufficient compensation. As will be shown in Chapter 6, when suit is necessary, the injured person must find and retain competent legal counsel, must institute a civil action, must produce witnesses and marshal evidence, must wage a skillful legal contest before a fickle jury. There will be delays, postponements, appeals, expenses, time and trouble, and other discouragements. The issue is in doubt and the net results uncertain. Even if the victim wins, the defendant’s limits of
1 William L. Prosser, Law of Torts (2d ed.; St. Paul, Mimi.: West Publishing Co., 1955), p. 20.
2 In most states the victim must be entirely free from fault to be entitled to recovery from the offending motorist. In the others, partial recovery is allowed victims who have themselves been negligent, provided that their negligence is less than that of the offending motorist (i.e., less than 50 per cent). These two theories of fault—contributory negligence and comparative negligence, respectively—will be discussed in detail in Chapters 4 and 5.
a These and other victims (such as those involved in unavoidable accidents and acts of God) are not without the co-operation of their fellow men. Through the insurance device they may protect themselves in divers ways against bodily injury, property damage, and accidental death. This will be discussed later in this chapter.

without according the event comprehensive recognition in the form of a new text. This omission has hindered the serious student in the pursuit of fruitful knowledge and has discouraged the processes of formal education in an important area, two results which have seemed to the author well worth remedying. Such has been the genesis of the present work.
In content the text covers the nature and economic dimensions of the automobile accident problem, the statutes and common-law principles developed to cope with its legal and financial aspects, the structure and functions of the automobile insurance business, and the coverages and contracts created by insurers in response to market needs and legislative pressures. Thus, the viewpoints of victim, jurist, insurer, and motorist are all represented.
The presentation is patterned after the belief that contra:ts, practices, and institutions are best understood when considered in close view of the problems they have been created to solve. To this end the reader is copiously supplied with practical examples and actual cases. This is not to say, however, that theory has been neglected. The reader’s attention is directed to both legal doctrines and insurance principles and, in addition, in the treatment of underwriting and selling functions, a modest effort has been made to introduce theory from the disciplines of economics, statistics., and marketing. Whether dealing with contracts, functions, or institutions, the text places reiterative emphasis on underlying purposes and fundamental needs so that time and change will not soon depreciate the lessons to he learned from it.
The text has been designed to serve as the basis for a one-term college- level course in automobile insurance. It should also provide a valuable connecting link between the insurance and law sections of the C.P.C.U. program because of the considerable attention paid those aspects of negligence law, both substantive and procedural, which relate closely to the insuring clauses and conditions of the liability insurance contract.
It is difficult to make specific acknowledgment of the many helpful sources from which advice, criticism, and inspiration have come. As a former employee of both bureau and independent automobile insurers, the author has an indebtedness to many executives in production, claims, and underwriting from whom, over the years, he obtained many of the ideas which now find formal exprcssion in this text. Much of the content comes from lecture notes which were subjected to severe testing by a long succession of classes in automobile insurance offered by the University of Rhode Island to both undergtaduate and extension students. Meeting the practical requirements of agents, adjusters, underwriters, and field men on the one hand, and the theoretical needs of university undergraduates on the other, necessitated a period of experimentation in which innumerable students unknowingly served as challenging critics.
For materials, encouragement, manuscript readings, and assistance of various kinds, the author is indebted to many orginizations, including the Providence Washington Insurance Company, the Automobile Mutual Insurance Company of America, the Rhode Island Insurance Agents Association, the Rhode Island Statc Insurance Department, the Association of Casualty and Surety Companies, The Travelers Indemnity Company, the Aetna Casualty and Surety Company, the Insurance Company of North America, and also to many friends serving the insurancc business in various capacities in Providence and elsewhere.
To Professor Ralph I-i. Blanchard the author is obligated for models of style and accuracy of expression which gave him an ideal to strive for. To Professor Bowers and Dr. Gregg, co-editors of the Irwin Series in Insurance, and especially to Dr. Daniel P. Kedzie, Director of Management Education for the American College of Life Underwriters, the author is extremely grateful for a thoughtful reading of the manuscript and for many constructive recommendations. To Mrs. Yvonne Stefano the author wishes to express his appreciation for quick and efficient secretarial service cheerfully rendered.

IN 1935, the National Bureau of Casualty and Surety Underwriters and the American Mutual Alliance promulgated a standard provisions program for the writing of automobile liabilit’ insurance by their respective members.
This was a happy occasion for the literature of automobile insurance because two authorities on the subject were persuaded to write critical explanations of the new contract provisions for the benefit of all those who would have to work with them (including the present author who was shortly to begin his insurance career as an underwriter for a leading New York casualty company). The first text to appear (1936) was by E. W. Sawyer of the Massachusetts bar and the second (1938) was by John A. Appleman, legal counsel for the State Farm Mutual Automobile Insurance Company. Both texts were entitled Automobile Liability Insurance.
More than a score of years has passed since the publication of these texts, and the automobile insurance business has burgeoned into a giant industry with aggregate annual premiums of $6 billion. On both a premium and man-hour basis, automobile insurance has become by far the most important commercial line outside the life arid health insurance field, accounting for 40 per cent of combined fire-casualty sales and dealing with an accident problem of vast economic and legal proportions.
Further, this growth has occurred in a new era of flux marked for the automobile insurance business by legislative change without and competitive change within. While traditional insurers have suffered recurrent setbacks in sales and profits, independent insurers, responding to new market trends, have forged steadily ahead to occupy commanding positions in the industry’s front ranks. New departures in coverage and entirely new contracts have been produced and widely promoted. In addition, automobile physical damage insurance has received broad acceptance by car owners everywhere.
It is curious, therefore, that subsequent writers of insurance texts— commendably productive in other specialized areas—have allowed nearly
a quarter century of change to remold the automobile insurance business