The auto-choice reform has the further appeal of improving the free market nature of the auto insurance system. The current auto insurance system functions within limits set by laws and regulations, and consequently is limited in meeting the demands of consumers. The unbundling of pain and suffering damages, however, allows suppliers to provide insurance coverage that better meets the tastes and needs of individual consumers. This change constitutes a significant improvement on the current situation in which all individuals are forced to purchases essentially the same package of services, regardless of their individual preferences and tastes.

Savings from Auto-Choice Reform
      The effects of an auto-choice plan are estimated in a 1995 study by Allan Abrahamse and Stephen Carroll of the RAND Institute for Civil Justice, a nonprofit think tank.[13] The available savings for 1996, presented in Table 1, are estimates based on extrapolations of the RAND study. For the country as a whole, an auto-choice plan would make available $40.0 billion in savings. If all drivers opted for auto-choice, private passenger automobile insurance premiums would decline $31.7 billion, a savings of 28.6 percent.[14] Potential savings for commercial auto premiums run higher at 33.3 percent, yielding up to $8.3 billion.[15] In many states, such as New York and California, individual premium savings for those who switch exceed 30 percent. A state-by-state breakdown of savings is presented in Table 2.