Insurance Law Commons^™

Employment Practices Liability Insurance And Ex Post Moral Hazard, Joni Hersch, Erin E. Meyers

Vanderbilt Law School Faculty Publications

Many businesses purchase Employment Practices Liability Insurance (EPLI), a form of insurance that protects them from claims of discrimination, harassment, retaliation, and wrongful termination. But critics of EPLI argue that allowing insurance coverage for employment liability detracts from employment law's goal of deterrence and from notions of justice. We assess the validity of these criticisms by examining the nature of employment law claims and by reviewing characteristics of the current EPLI market. We find that past critiques miss the mark in diagnosing EPLI's major problem.

The EPLI market, for the most part, functions in a way that poses little to …

Deals, Victor P. Goldberg

Faculty Scholarship

Over a quarter of a century ago, Ron Gilson, Dan Raff, and I developed a new course, The Economics of Complex Transactions, which came to be known as Deals. The motivation for the course was our perception of a great imbalance in the law school curriculum, which was weighted heavily toward litigation, particularly appellate litigation. While a substantial number of our graduates were becoming transactional lawyers, there was hardly anything available to prepare them for that practice. Our concept was that lawyers were transaction engineers and, when designing contracts, they faced a generic set of problems. Furthermore, there were techniques …

How Liability Insurers Protect Patients And Improve Safety, Tom Baker, Charles Silver

All Faculty Scholarship

Forty years after the publication of the first systematic study of adverse medical events, there is greater access to information about adverse medical events and increasingly widespread acceptance of the view that patient safety requires more than vigilance by well-intentioned medical professionals. In this essay, we describe some of the ways that medical liability insurance organizations contributed to this transformation, and we catalog the roles that those organizations play in promoting patient safety today. Whether liability insurance in fact discourages providers from improving safety or encourages them to protect patients from avoidable harms is an empirical question that a survey …

Back To The Future Of Cyber Insurance, Tom Baker

All Faculty Scholarship

Written for an insurance trade publication, this brief essay identifies five ways that insurers manage uncertainty in selling cyber insurance: (1) providing valuable services beyond risk transfer; (2) contract design, (3) rapid iteration of pricing and forms, (4) limits management and reinsurance, and (5) claims disputing. Cyber insurers provide easy-to-price loss prevention and mitigation services so that the value proposition includes more than the (difficult to price) risk transfer. Cyber insurers design their contracts to include narrowly defined categories of coverage, typically with separate limits and with claims-made coverage for liability risks, and traditional insurers design their contracts to limit …

The Unappreciated Importance, For Small Business Defendants, Of The Duty To Settle, Robert Heidt

Maine Law Review

This paper suggests how the duty to settle, which requires liability insurers to pay damages awarded against their insured in excess of the policy limits when the insurers reject a reasonable settlement offer within the limits, may have indirectly led certain of their insureds--small business recreational vendors like horse riding stables or some motels offering swimming pools with diving boards--to sanitize the recreational activities they offer. More generally, the duty to settle's effect on the lawsuits injured customers brought against small business recreational vendors may have led a wide variety of such vendors to sanitize activities the vendors previously offered …

In Defense Of The Restatement Of Liability Insurance Law, Tom Baker, Kyle D. Logue

Articles

The importance of liability law to the American system of justice, and to the US economy in general, are well known. Somewhat less well known, at least among non-lawyers, is the corresponding centrality of liability insurance. For most non-contractual legal claims for damages that are brought against individuals or firms, there is some form of liability insurance coverage. Such coverage, provided by state-regulated insurance companies, ranges from auto and homeowners’ policies (sold to consumers throughout the country) to commercial general liability policies (sold to businesses of all sizes) to professional liability policies of various sorts (including Directors and Officers coverage …

Forced Arbitration’S Lethal Consequence, Joanne Doroshow

Other Publications

No abstract provided.

Rodney Dangerfield No More: The American Law Institute's Coming Restatement Of The Law Of Liability Insurance, Jeffrey W. Stempel

Scholarly Works

In a casebook I co-author, "Principles of Insurance Law," with Peter Swisher and Erik Knutsen, we refer to insurance as "the Rodney Dangerfield of law." It just does not (to paraphrase the words of the late comedian), get enough respect. Lawyers are familiar with (and have been since perhaps the fourth week of law school), the American Law Institute's Restatements of the Law, particularly widely cited restatements, such as those governing torts and contracts (and, to a lesser extent, judgments, conflict of laws, restitution, suretyship and others). Despite the importance of insurance in the civil justice system, it has been …

The Impact Of State Farm V. Alexander On Uninsured And Underinsured Motorist Coverage Generally, And In To Relation To The Owned-But-Not -Insured Exclusion, Shawn Gordon Lisle

Akron Law Review

The discussion contained herein will commence with a brief examination of the uninsured and underinsured motorist statute's purpose.

Following the discussion of the uninsured motorist statute's purpose, the discussion will proceed to survey all cases to date which have had occasion to deal with Alexander in a substantive manner. Nine of the twelve Ohio appellate districts have considered the Alexander decision in some respect. Likewise, the Ohio Supreme Court has cited to Alexander as authority for reversing appellate court decisions which upheld exclusions violative of R.C. § 3937.18's purpose. Each decision shall be presented and examined in turn, grouped either …

The Uneasy Case For Food Safety Liability Insurance, John Aloysius Cogan Jr.

John Aloysius Cogan Jr.

Public Policy And Aviation Liability Insurance, William E. Gibbs

Pepperdine Law Review

No abstract provided.

In California Excess Liability Cases, Does “Bad Faith” In Law Equal “Strict Liability” In Practice?, Roger D. Marlow, Ronald E. Magnuson

Pepperdine Law Review

No abstract provided.

Regulation By Liability Insurance: From Auto To Lawyers Professional Liability, Tom Baker, Rick Swedloff

All Faculty Scholarship

Liability insurers use a variety of tools to address adverse selection and moral hazard in insurance relationships. These tools can act on insureds in a manner that can be understood as regulation. We identify seven categories of such regulatory activities: risk-based pricing, underwriting, contract design, claims management, loss prevention services, research and education, and engagement with public regulators. We describe these activities in general terms and then draw upon prior literature to explore them in the context of five areas of liability and corresponding insurance: shareholder liability, auto liability, gun liability, medical professional liability, and lawyers’ professional liability. The goal …

Recent Developments In California Insurance Law: Enforceability Of Stipulated Judgments Against Insurance Carriers, Steven L. Paine, Wynn Heather Sourial

Pepperdine Law Review

No abstract provided.

Transparency Through Insurance: Mandates Dominate Discretion, Tom Baker

All Faculty Scholarship

This chapter describes how liability insurance has contributed to the transparency of the civil justice system. The chapter makes three main points. First, much of what we know about the empirics of the civil justice system comes from access to liability insurance data and personnel. Second, as long as access to liability insurance data and personnel depends on the discretion of liability insurance organizations, this knowledge will be incomplete and, most likely, biased in favor of the public policy agenda of the organizations providing discretionary access to the data. Third, although mandatory disclosure of liability insurance data would improve transparency, …

The Shifting Terrain Of Risk And Uncertainty On The Liability Insurance Field, Tom Baker

All Faculty Scholarship

Recent sociological and historical work suggests that insurance risks often are not reliably calculable, except in hindsight. Insurance is “an uncertain business,” characterized by competition for premiums that pushes insurers into the unknown. This essay takes some preliminary steps that extend this insight into the liability insurance field. The essay first provides a simple quantitative comparison of U.S. property and liability insurance premiums over the last sixty years, setting the stage to make three points: (1) liability insurance premiums have grown at a similar rate as property insurance premiums and GDP over this period, providing yet another piece of evidence …

Cargill V. Ace American Ins. Co.: The Minnesota Supreme Court Reminds Us Of The Value Of Every 2-Year-Old's Favorite Question, Chad Snyder

Journal of Law and Practice

No abstract provided.

Liability Insurance Coverage For Clergy Sexual Abuse Claims, Peter N. Swisher

Law Faculty Publications

This article addresses issues that arise when a policyholder under a standard general liability insurance policy, not containing an express sexual abuse coverage endorsement (or an express sexual abuse exclusion), seeks insurance coverage for sexual abuse claims. Such cases continue to increase in frequency as the legacy of sexual abuse and molestation generates an unrelenting deluge of insurance coverage claims.

The purpose of this article is to explore and analyze the case law and various legal theories supporting and rejecting liability insurance coverage claims involving institutional sexual abuse allegations. This article concludes by recommending a better-reasoned objective concurrent causation legal …

Failure To Allocate? Nobody Pays: Using Miller Shugart Settlements In Cases Of Questionable Insurance Coverage, Jerome Abrams

Journal of Law and Practice

No abstract provided.

A Selective Appraisal Of The P&I Insurance System With Special Reference To Claims For Personal Injury, Illness And Loss Of Life, Mya Thida Lin

World Maritime University Dissertations

No abstract provided.

Liability Insurance At The Tort-Crime Boundary, Tom Baker

All Faculty Scholarship

This essay explores how liability insurance mediates the boundary between torts and crime. Liability insurance sometimes separates these two legal fields, for example through the application of standard insurance contract provisions that exclude insurance coverage for some crimes that are also torts. Perhaps less obviously, liability insurance also can draw parts of the tort and criminal fields together. For example, professional liability insurance civilizes the criminal law experience for some crimes that are also torts by providing defendants with an insurance-paid criminal defense that provides more than ordinary means to contest the state’s accusations. The crime-tort separation in liability insurance …

Insuring Corporate Crime, Miriam Hechler Baer

Indiana Law Journal

Corporate criminal liability has become an important and much-talked about topic. This Article argues that entity-based liability-particularly the manner in which it is currently applied by the federal government---creates social costs in excess of its benefits. To help companies better deter employee crime, the Article suggests the abolition of entity-wide criminal liability, and in its place, the adoption of an insurance system, whereby carriers would examine corporate compliance programs, estimate the risk that a corporation's employees would commit crimes, and then charge companies for insuring those risks. The insurance would cover civil penalties associated with the entity's employee-related criminal conduct. …

Malpractice Payouts And Malpractice Insurance: Evidence From Texas Closed Claims, 1990-2003, Charles Silver, Kathryn Zeiler, Bernard Black, David Hyman, William Sage

Faculty Scholarship

Background. This study is the first to quantify physicians' malpractice insurance limits. It also examines the connection between policy size and payments on claims, including the frequency of settlement at the policy limits and the frequency of out-of-pocket payments.

Methods. Statistical analyses using data collected by the Texas Department of Insurance (TDI) covering all insured medical malpractice claims against physicians closed between 1990 and 2003 with payment of $25,000 or more (measured in 1988 dollars).

Results. Contrary to conventional wisdom, per-occurrence limits of $500,000 or less were as common as $1 million limits. Nominal policy size was stable over time, …

Incentive Effect Of Liability Rules In The Presence Of Liability Insurance In The Maritime Law Context: An Economic Analysis, Muhammad Masum Billah Dr.

Muhammad Masum Billah Dr.

Incentive effect of liability law may be affected by the presence of liability insurance. Apparently when a party has liability insurance and does not have to pay directly from its own pocket, it will have less motivation to exercise proper care. This tendency of an insured is known as “moral hazard.” There are many studies on the problem of “moral hazard” and on various mechanisms how to address it. Yet, there is a lack of academic discussion on comparative analysis between liability law and liability insurance in terms of their effect on creation of incentives; that is, whether liability law …

A Crack In The Shield? Malpractice Coverage At Risk, Daniel S. Kleinberger

Faculty Scholarship

A recent, unreported opinion of the Minnesota Court of Appeals has opened up a major hole in the liability shield of professional firms. Continental Casualty Co. v Duckson-Carlson, LLC, misapplies the doctrine of equitable estoppel, misinterprets the Minnesota Professional Firms Act, ignores the fundamental distinction between an entity and its owners, and sub silentio turns the law of third party beneficiaries on its head. From a practical perspective, the decision should trouble every lawyer, doctor, accountant, and other "319B" professional in the state and, moreover, has serious implications for individuals covered by D&O insurance

Can The Injured Pet Owner Look To Liability Insurance For Satisfaction Of A Judgment? The Coverage Implications Of Damages For The Injury Or Death Of A Companion Animal, Mark Sadler

Animal Law Review

Much has been written in recent years regarding the important role pets play in our society and the legal consequences that have developed from that relationship. Both our courts and legislatures have recognized, in certain circumstances, the ability of a pet owner to recover from a wrongdoer in the event of negligent or intentional conduct that results in the death or injury of a companion animal. However, securing a damages award and recovering on a judgment secured may present the aggrieved pet owner with two entirely different challenges. Liability insurance coverage is critical to the latter concern. This paper provides …

Insuring Liability Risks, Tom Baker

All Faculty Scholarship

Recent dramatic increases in prices for medical liability insurance, directors and officers insurance, and other lines of commercial liability insurance, together with the exit of some insurers from those lines of business, has placed liability insurance on the public agenda. At the same time, asbestos and environmental losses continue to mount under general liability insurance policies sold long ago, when no one could have predicted the extent or cost of such losses. In combination, these and other related events have raised serious concerns about the insurability of liability risks and have prompted calls for dramatic efforts to roll back the …

Using Environmental Insurance To Manage Risk Encountered In Non-Traditional Transactions, Janice E. Falini

Villanova Environmental Law Journal

No abstract provided.

The Sounds Of Silence: Waiting For Courts To Acknowledge That Public Policy Justifies Awarding Damages To Third Party Claimants When Liability Insurers Deal With Them In Bad Faith, Francis J. Mootz Iii

Scholarly Works

A long-standing and virtually unchallenged doctrinal rule provides that a liability insurance carrier owes no duties in tort or contract to a third-party claimant who has been injured by its insured. As a matter of doctinal consistency and logic, the traditional rule makes some sense. The liability insurer has no contractual relationship with the claimant, and third-party beneficiary doctrine is not easily used to impose duties. Moreover, by stepping into the shoes of the insured tortfeasor to whom it owes a heightened duty of good faith, the insurer is in an adversarial relationship with the claimant that makes it difficult …

Coverage For Unfair Competition Torts Under General Liability Policies: Will The "Intellectual Property" Tail Wag The Coverage Dog?, Francis J. Mootz Iii

Scholarly Works

The scope of "advertising injury" coverage in general liability policies has been shrinking in response to the proliferation of liabilities caused by the growth of the cyber-economy. In response to this shrinking coverage under general liability policies, insurers have been quick to develop new endorsements and specialized products to fill the gaps in coverage. The author argues that significant commercial risks relating to unfair competition claims have been eliminated from coverage under general liability policies, but that there also appears to be no corresponding development of specific endorsements or stand-alone products to deal with this gap in coverage. Specifically, claims …