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Crumpled cars, glazed-eyed victims, and blinking ambulance lights are depressingly familiar sights on the nation's highways. U.S. traffic accidents last year killed 56,000 people and injured 4,600,000 others. In addition to the human suffering, the economic loss amounted to $16.5 billion in the form of medical costs, lost income, and property damage. The failure of auto insurance adequately to meet many of these losses has long been a subject of sharp controversy.

Most of the argument focuses on the fact that accident victims must prove that another driver was at fault--and then collect from that driver's insurer. As a result, say critics, litigation causes long delays and ballooning premium rates, and many victims get no payment at all.

With the backing of Governor Nelson Rockefeller, New York State's Insurance Department has just proposed a new "no-fault" auto-insurance plan. The idea has already aroused the interest of authorities in many other states, some of whom have tried but failed to institute less comprehensive systems. The plan would provide prompt payment by sweeping away the legal need to fix the blame in cases of bodily injury. Instead, an accident victim could collect medical costs and compensation for lost income for himself and his passengers from his own insurance company. By minimizing legal, investigative and administrative expenses and other costs, this system, say state insurance officials, could reduce auto insurance premiums by an estimated 56%.

Since the question of blame would no longer apply, all victims with legitimate claims could expect to receive payment within 30 days. To help hold premium rates down under the new plan, medical payments would not be made if a driver or his passengers already had adequate coverage through Blue Cross or another insurance plan. Nor would there be compensation for "pain and suffering," which New York officials contend is often a nuisance claim used by a victim's lawyer to win more money. Damages for permanent injury or bodily dismemberment would not be paid as such, but under the proposed system victims would be compensated for lost income for the entire period of their disability, in a manner similar to that offered by incomemaintenance insurance. Premium rates would be calculated on the basis of income, age, medical coverage, the size of a family, and the territory. A Manhattan family of five with no young driver, medium medical coverage and an income of $7,500 a year would pay $84 a year under the new system, compared to $179 under existing policies. A victim dissatisfied with his compensation could go to court and sue his insurance company for more. In cases involving a death, or drunken driving, innocent victims could sue the other driver's company.

Question of Negligence. The reaction of insurance executives is mixed. Donald Segraves, vice president of the American Mutual Insurance Alliance, which represents 115 companies, insists that the plan would work a hardship on victims. They could not collect, says Segraves, until they had exhausted all their other resources--accident and health insurance, wage-continuation benefits, union health-and-welfare benefits, Social Security payments and Medicare. A spokesman for Allstate Insurance Co. said: "It is easy to cut the cost of insurance when you cut benefits or prohibit recovery of damages for a loss of a leg or an eye." By contrast, officials of Aetna Life & Casualty and the American Insurance Association, which represents 125 of the largest companies in the country, favor the plan. Moreover, T. Lawrence Jones, association president, believes that the new proposal would enable some insurance companies to stop losing money on auto policies.

The American Bar Association has already condemned the "no-fault" plans partly on the ground that they would deprive victims of the traditional adversary system of justice. No-fault insurance would also deprive many lawyers of many cases--to say nothing of their share in the insurance awards collected by their clients. The bill to establish the new system faces a rough time in the State Legislature in Albany. A majority of its members are lawyers.

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