Covering Accident Costs

Covering Accident Costs: Insurance, Liability, and Tort Reforms

Copyright Date: 1995
Published by: Temple University Press
Pages: 264
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  • Book Info
    Covering Accident Costs
    Book Description:

    Over the past century, tort law and insurance have developed deeply intertwined legal and economic roots. Insurance usually determines whether tort cases are brought to trial, whom plaintiffs sue, how much they claim, who provides the defense, how the case gets litigated, the dynamics of the settlement, and how much plaintiffs ultimately recover. But to what extent should liability rules be influenced by insurance? In this study, Mark Rahdert identifies the leading arguments both in favor of and against what he terms the "insurance rationale"-the idea that tort law should be structured to facilitate victim access to assured compensation.

    The insurance rationale has been a leading force in the development of product liability law and, as a component of accident compensation, has significantly influenced pro-plaintiff advances in principal areas of tort law. However, the insurance rationale is also the source of great controversy. Critics charge that liability rules deliberately set to maximize plaintiffs' access to insurance funds have corrupted the system, causing insurance costs to spiral upward uncontrollably. Considering the strengths and weaknesses of both sides of the current debate, Rahdert develops a modified version of the insurance rationale that can become a tool for evaluating future tort reform proposals.

    eISBN: 978-1-4399-0452-7
    Subjects: Sociology

Table of Contents

  1. Front Matter
    (pp. i-viii)
  2. Table of Contents
    (pp. ix-xii)
    (pp. 1-6)

    The law of torts and the institution of insurance have enjoyed a long and complicated relationship. Scarcely anyone familiar with the American system for tort compensation would deny that it has been profoundly influenced in the twentieth century by the fact that many, if not most, defendants who wind up paying damages to plaintiffs both are able to and do routinely insure against such losses. Surely, anyone who has spent any time as a practitioner in either the plaintiffs’ or defense bar is acutely aware of the many ways in which the presence of liability insurance affects the tort litigation...

  4. PART I: The Insurance Rationale for Tort Liability in Legal Theory

    • [I Introduction]
      (pp. 7-10)

      For tort scholars, the issue of the connection between insurance and tort liability is by no means a novel concern. Of course, much of tort theory during the past century has had relatively little to do with insurance. Scholars who have labored to understand the emerging content of particular tort concepts or principles, such as privacy or causation or assumption of risk, have often been able to put insurance considerations to one side, either as a given or as a factor to be held in check so that other dimensions of the common law could be explored. Nevertheless, a succession...

    • ONE The Early History of the Insurance Rationale
      (pp. 11-22)

      In the common law we inherited from England, torts was a subject that received remarkably little attention.¹ This was probably due in large measure to the fact that substantive tort doctrine was vastly overshadowed in influence by the “forms of action”—arcane rules of pleading that governed the progress of tort suits in English and early American courts.² Compensation for injuries caused by another had been a feature of the common law since the Middle Ages. But in many of the leading common-law cases, procedure rather than substance determined outcomes. Cases were won or lost over whether they belonged in...

    • TWO Emergence of a General Insurance Rationale: The Triumph of Legal Realism
      (pp. 23-36)

      It seems curious that the enthusiasm for the insurance rationale with respect to workplace injuries did not immediately spread to other aspects of tort law. Yet most tort scholars, like most courts, remained content with the negligence principle and with the baggage of evidentiary burdens, immunities, and defenses that it had acquired. They continued to view liability in highly individual terms, and they refused to draw any significant distinctions between the liability of individuals for negligent action and that of corporate or institutional actors. Indeed, much tort scholarship during the first half of the twentieth century was devoted to concerns...

    • THREE The Insurance Rationale Decried: The Theoretical Underpinnings of the Current Movement for Tort Reform
      (pp. 37-50)

      In legal scholarship, the insurance rationale probably reached its heyday sometime during the early or mid 1970s. But even before it reached that point, some tort scholars, particularly some participants in the law-and-economics movement and supporters of so-called no-fault insurance, launched a salvo of criticism that cut sharply against the grain of the insurance rationale.¹ That critique enjoyed a building crescendo of support through the 1980s, and it ultimately supplied the recent tort reform movement with its theoretical underpinnings.

      Critics of the insurance rationale have fixed most of their attention on two issues: (I) the choice between negligence and strict...

    • FOUR The Role of Insurance in Tort Liability: Some Preliminary Lessons from Scholarship
      (pp. 51-56)

      One cannot accurately gauge the proper function of the insurance rationale without making at least some attempt to discern how it has been used in practice. I take up that subject in Part II. Nevertheless, the preceding discussion of the insurance rationale in tort scholarship yields some important preliminary judgments that are worth recording before delving into statutes and case law. Indeed, from the differing scholarly perspectives discussed above, one can assemble a kind of “decision tree”¹ with respect to the role of insurance in setting tort liability, which itself may serve as a helpful framework for measuring actual legal...

  5. PART II: The Insurance Rationale for Tort Liability in Practice

    • [II Introduction]
      (pp. 57-60)

      Adequate consideration of the insurance rationale for tort liability, especially as it relates to questions of tort reform, cannot take place in a scholarly vacuum. Much depends on whether and how the insurance rationale is used by courts and legislatures in the actual process of setting liability rules. The contemporary criticism of tort doctrine that constitutes the linchpin for tort reform is not merely theoretical. It rests on the assertion that the insurance rationale is overused in practice, especially by the courts, and that this overuse is harmful to the health of the accident compensation system. Thus, it is essential...

    • FIVE Judicial and Legislative Approaches to the Insurance Rationale
      (pp. 61-78)

      Throughout the nineteenth century and during much of the twentieth century, courts and legislatures either refused to recognize the insurance rationale at all or gave it grudging acceptance and extremely limited scope. Courts initially viewed the very idea of insuring against one’s liability to another with skepticism, although by the close of the nineteenth century the pressures of business necessity allowed liability insurance to develop. Nevertheless, well into the twentieth century, most courts held to the view that tort liability ought to be developed without regard to the method by which compensation was financed; it was an article of faith...

    • SIX Some Prominent Examples of the Insurance Rationale in Practice
      (pp. 79-98)

      It would unduly lengthen this study to describe in detail all the legal developments that have been influenced by the insurance rationale. Thirty years ago the published judicial opinions using or discussing the insurance rationale still amounted to a relative handful. Today, they probably number in the hundreds, representing a diverse span of courts and jurisdictions. Nevertheless, it may be possible to convey some of the flavor of judicial use of the rationale, in particular, by examining a few leading examples of the insurance rationale in action. Justice Traynor’s use of the rationale inEscolaI have already discussed. In...

    • SEVEN Summary of Principal Themes
      (pp. 99-104)

      Perhaps the best way to gather the modem strands of the insurance rationale together is to consider which arguments about the insurance rationale from scholarship have been accepted and put to use by courts and legislatures. This, in turn, will allow us to plot the point where contemporary practice places us on the tort “decision tree” set out at the end of Part I. Generally, courts and legislatures have absorbed the bulk of the realists’ argument for adoption of the insurance rationale, albeit in more-simplified terms . Still, only rarely have they given those arguments detailed consideration, and they have...

  6. PART III: The Insurance Rationale, the Liability Insurance Crisis , and the Future of Tort Reform

    • EIGHT The Insurance Rationale and the Late Liability Insurance Crisis
      (pp. 109-126)

      Before considering the developments that have prompted the tort reform movement, it may be helpful to dwell for a moment on the meaning of the much-overused term “crisis.” My edition of theOxford English Dictionary¹ offers three interrelated meanings that are potentially relevant to the present discussion, each of which connotes a different degree of urgency. In medicine, “crisis” sometimes takes on a relatively technical meaning. It is defined as the turning point for better or worse in an acute life-threatening disease—the point where, after medical science has done its utmost, the patient either begins to recover or dies....

    • NINE The Insurance Rationale Reconsidered
      (pp. 127-178)

      Even though the hikes in liability premiums during the last decade do not establish a true crisis, this still seems to be an appropriate time to give thorough reconsideration to the insurance rationale. Several factors support this conclusion. This is probably the first point in our nation’s history when we have accumulated sufficient experience with practical application of the insurance rationale to observe, even partially, its effect. Only since the widespread development of products liability law in the 1970s can it be said that the American tort system has given anything like a substantial embrace to the insurance rationale. Interestingly,...

    • TEN The Insurance Rationale and the Future of Tort Reform
      (pp. 179-188)

      What, then, should be the modem contours of the insurance rationale? In part, the preceding discussion confirms that there is neither a clear nor a demonstrably “right” answer to that question. The answer we give depends in large measure on the relative importance we assign to the social value of compensation as a goal of tort liability. It also depends on a host of guesses and assumptions we have to make, without the benefit of much information, about an extremely wide range of social phenomena associated with injury, the characteristics of injurers and victims, and the ways in which they...

  7. NOTES
    (pp. 189-242)
  8. INDEX
    (pp. 243-250)