What is liability insurance?
Cover against legal liability which he may incur to 3rd party. Some insurance schemes amount to a combination of liability and loss insurance e.g. Comprehensive
Advantages and disadvantages of loss insurance
Adv
- does not impinge on your ability to bring a tortuous claim.
- only based on loss, not fault, v broad
- compensation even where no identifiable torts easier
Disadv
- less comfort to claimant, not comeback for person who has caused you damage, just payment
- not full compensation ie not for solatium etc
Advantages and disadvantages of liability insurance
Advantages
- claimants can receive damages even if action being brought against person with insufficient funds or company in liquidation.
General disadvantages of insurance
- not personal liability, bad for tort law’s rationales
- doesn’t encourage responsibility for actions, no deterrent function
- overcompensation - too many systems, unfair if get more
- if willing to pay price, let insurer pay, you can commit torts
What kind of damage would we expect the actual defendant to pay for?
- psychiatric - caused deep psychological trauma, long term
- defamation - cuts right to the core of your dignity, targeted to harm pursuer
- intentional - feel more affronted where there has been deliberate and malicious denial of your rights
Should insurance be relevant?
No, shouldn’t really matter about where the money comes from, as long as someone does
But - higher if insurance, less impact on individual, loss spreading etc?
To what extent does the law take loss insurance benefits into account?
Loss
- irrelevant to tort liability it D damages c’s property and this is covered by insurance, no defence if c collected on insurance
wasteful to do this?
Fact that claimant was insured does not mean that he cannot have a claim, but this, combined with other factors, can defeat a claim (Nettleship v Weston)
To what extent does the law take liability insurance benefits into account?
Impact on attitude - penalising –> compensating
Impact on decision making - vigorously asserted that must disregard (Viscount Simonds) but where uncertain whether to pin liability, can be important (Voules v Evans)
Who pays to bring a legal claim?
No win - no fee type agreements –> in return for role, gets success fee if claims succeed
BTE insurance –> private legal aid.
Costs shifting - if claimant wins, defendant has to pay their costs but not in other direction
Adv / disadv of strict liability / other no fault systems
Adv
- don’t have to prove fault
- less contentious so less costly
- more ppl succeed - more justice?
Disadv
- removes already minor deterrent role
- more expensive as more claimants will succeed
- have to give more ppl less, not good
Adv and disadv of compensation schemes
Adv
- don’t have to prove fault
- litigation not used so cheap
- don’t have to prove causation
- SoS already has power to implement
Disadv
- only in particular circumstances
- often not for pecuniary losses
- no deterrent, allows people to behave as they choose and no comeback as someone else pays
- means tested only
- expectations v reality of funds rec’d is pretty crap
Is there a case for the abolition of the tort system?
Adv of tort
- deterrent function
- responsibility for your actions
- comfort to claimant
- gives compensation for solatium is widely available
Disadv
- fault must always be proven - high burden on pursuer lengthens decision-making process
- causation must be proven - don’t need for first party or compensation schemes
- deterrent function not really useful - generalised duty of care unhelpful & not personalised liability
- high costs - cost of operation = 85% of costs of compensation paid
- responsibility for your actions - diminished by insurance
- long delays, aggravates pressure to settle early
Adv / disadv of first party insurance over tort
Adv
- removing tort would force people to insure themselves and their families against losses
- vastly increased coverage as not dependent on fault
- people would only buy coverage they needed
Disadv
- based on ability to pay
- not imposing compensation on those at fault
- compensation for pain and suffering not available
- not everyone will take it up, ill-educated, don’t realise that you have to.
Conclusions
Tort is much more important as a source of compensation for personal injury, illness and death than as a source of property insurance
Valuable property likely to be the subject of first party insurance but other assets, maybe not
Although people insure against you or death and private insurance available, many people don’t take it up, who is to say they would if this was the only option
Serious implications for legal profession
Is the compensation culture an exaggeration?
Why is it a bad thing?
- evidence of moral decline, desperate for money
- unsustainable expense
- advertising suggests claiming is legitimate and fun
- assumption that claiming is bad, shouldn’t we let people have a go?
Why does it seem to be a big problem?
- political and media frenzy, anecdotes rather than stats - exciting and amusing to hear about. Moral panic
- no win no fee encouraging, easier to claim
But
- gradual increase over last 30 years, not really spiked since 90s
- actually due to better knowledge about claiming
- can’t really get money for any old thing, still have to prove your case
- media amplification
- people still not convinced that they will have success and also concern over legal costs
Conclusion
- increase in last 30 years, but not out of control
- underclaiming still happens
- media find this attractive, as do their readers. Name and shame!
What is loss insurance?
Owner has cover against loss / damage to property against prescribed risks. Possession as well as ownership. Life, personal injury, home and contents etc.
