Liability insurance significantly impacts the tort system, covering approximately 80-85% of tort damages. Despite its importance, it remains underrepresented in many leading tort theories. This article examines how liability insurance influences tort liability and why it should be integrated into tort theories for a more comprehensive understanding of tort law.
The Impact of Liability Insurance
Liability insurance influences judicial decisions by affecting determinations of liability. Courts often consider the availability of insurance when making rulings, which shapes the development of tort doctrines. For instance, in significant cases like Davie v New Merton Board Mills and Lister v Romford Ice Storage Co Ltd, judges have acknowledged the relevance of insurance in their decisions (Cambridge). This consideration extends beyond merely being a funding source; it affects the dynamics of tort litigation, including decisions on whether to settle or appeal cases (Private Law Theory).
Underrepresentation in Tort Theories
Many leading tort theorists, such as Professors John Goldberg and Benjamin Zipursky, mention liability insurance minimally in their works. This omission leads to incomplete and potentially inaccurate portrayals of tort law. For instance, Goldberg and Zipursky’s civil recourse theory and Gregory Keating’s recent book on tort theory both briefly mention liability insurance but do not thoroughly examine its impact (Oxford Academic).
Historical Influence
Historically, liability insurance has played a defining role in shaping modern tort liability. It has influenced what constitutes tortious wrongs and contributed to the expansion of tort liability over the past century. By facilitating the spread of risk, promoting safety, and ensuring compensation for victims, liability insurance has fundamentally shaped the tort system (Cambridge).
Practical Implications for Courts
Courts should formally acknowledge the role of liability insurance in their opinions and consider its market availability as part of the record in tort cases. This would provide a more accurate reflection of how tort law operates and evolves. For example, the insurance-facilitated expansion of tort liability has been a byproduct of insurance characteristics, which courts should openly recognize (Oxford Academic) (Private Law Theory).
Proposals for Reform
Integrating liability insurance into tort theories and judicial practices would provide a more comprehensive understanding of tort law. This integration would address the current gap in tort theories and reflect the realities of the tort system. By acknowledging the influence of liability insurance, tort theories can offer a more accurate basis for future legal developments and reforms (Cambridge) (Private Law Theory).
Conclusion
Liability insurance is a crucial yet underrepresented factor in tort theory. Its significant role in covering tort damages, influencing judicial decisions, and shaping the development of tort doctrines necessitates its inclusion in tort theories. By integrating liability insurance, tort theories can provide a more comprehensive and accurate understanding of tort law, reflecting its true nature and evolution.
Eric 
