Tort Luck and Liability Insurance

Important features of both the incidence and magnitude of tort liability depend heavily, and therefore arbitrarily, on luck. One of a number of examples is the eggshell-plaintiff rule, which imposes liability for all the physical injury a defendant causes, even if the amount of that injury was unforeseeable. In each instance, tort liability hinges on chance in a way that bears only an attenuated relationship, or no relationship, to the degree of responsibility that can fairly be attributed to the party in question. Despite the arguable injustices that tort luck reflects, it remains in the background, largely uncontroversial. Tort luck would be surprising, intolerable, or both, if it were not enmeshed in a system that relies so heavily on liability insurance to cushion its impact. Liability insurance reconciles, ameliorates, or eliminates many of the anomalies and contradictions in tort doctrines that might have otherwise disappeared long ago. This Article analyzes the ways that liability insurance interacts with tort luck, identifying the pervasive presence of insurance in tort liability, from both qualitative and quantitative perspectives. It then examines the tort doctrines and practices that make liability hinge, arguably arbitrarily, on luck, and the ways in which insurance ameliorates this tort luck. Finally, the Article develops a counter-history of tort law, exploring the shape that tort law might have taken if liability insurance had not been available to play a role in ameliorating tort luck.