Home Slideshow

Introduction

This Article provides a long-deferred answer to a question a student asked in my torts class some years ago: “What is insurance for tort law?” As I answered more briefly then, insurance is many things for tort law. Insurance not only dominates the defense side of most tort litigation, with all the institutional consequences that entails, but it also affects how we understand tort law. For example, the spread of liability insurance allowed mid-twentieth-century torts scholars and judges to imagine tort law as a loss-spreading and cost-internalizing institution,¹ 1.See infra Section III.A.Show More and liability insurance has simultaneously advanced and undercut tort law’s deterrence and corrective justice ever since its invention in the late nineteenth century.² 2.See infra Sections III.B–C; Kenneth S. Abraham, Liability Insurance and Accident Prevention: The Evolution of an Idea, 64 Md. L. Rev. 573, 580 (2005).Show More

My original plan was to write a short essay for torts teachers and students that summarized insights from prior work on the relationship between insurance and tort law. But recent, high-profile work by Kenneth Abraham and Catherine Sharkey prompted deeper exploration.³ 3.Kenneth S. Abraham & Catherine M. Sharkey, The Glaring Gap in Tort Theory, 133 Yale L.J. 2165 (2024).Show More In their 2024 Yale Law Journal article, Abraham and Sharkey argue that there is a “glaring gap in tort theory” that results from the failure of tort theorists to adequately address the dominant role of liability insurance in tort law and practice.⁴ 4.Id. at 2169.Show More They report that some courts are ahead of these tort theorists in that regard, already taking liability insurance into account when making tort doctrine.⁵ 5.Id. at 2191.Show More They applaud that practice and suggest that courts should do so more often, more explicitly, and on a more informed basis.⁶ 6.Id. at 2242.Show More

Their analysis prompted me to examine what philosophically oriented tort theorists have said about liability insurance. I found that, contrary to what a casual reader of Abraham and Sharkey’s article might conclude, tort theorists operating within the framework of moral philosophy have in fact considered liability insurance.⁷ 7.See, e.g., Jules L. Coleman, On the Moral Argument for the Fault System, 71 J. Phil. 473, 487 (1974) [hereinafter Coleman, On the Moral Argument]; Jules L. Coleman, Justice and the Argument for No-Fault, 3 Soc. Theory & Prac. 161, 164–65 (1974) [hereinafter Coleman, Justice and the Argument].Show More But, having done so, they decided that liability insurance considerations lie normatively outside the theories of tort law that they are developing.⁸ 8.See, e.g., Jules L. Coleman, Risks and Wrongs 198 (1992); John C.P. Goldberg, Unloved: Tort in the Modern Legal Academy, 55 Vand. L. Rev. 1501, 1519 (2002); Gregory C. Keating, Reasonableness and Risk: Right and Responsibility in the Law of Torts 290 (2022) (“[N]othing in negligence liability forbids injurers from insuring against potential liability, but nothing in negligence liability requires it either.”). For a notable exception, see Tony Honoré, The Morality of Tort Law—Questions and Answers, in Philosophical Foundations of Tort Law 73, 85–90 (David G. Owen ed., 1995).Show More Abraham and Sharkey disagree with that decision, but they support their disagreement with arguments that are unlikely to be persuasive to these theorists.⁹ 9.Abraham & Sharkey, supra note 3, at 2231–33 (suggesting that deontic theories should accommodate “instrumental and policy-based considerations” implicated by the presence or absence of liability insurance).Show More

My encounter with the work of these theorists, as well as with tort law practitioners, persuades me that there is value in trying to work out tort law right and wrong on some basis other than the inevitably incomplete social welfare analysis offered by standard law-and-economics accounts. If the scholars doing that work have concluded that liability insurance lies outside their project, the burden is on me to persuade them to reconsider. That requires using arguments that they could find persuasive.

This Article takes on that challenge while answering the original motivating question. As such, the Article makes both descriptive and normative contributions. The descriptive contributions are: summarizing what prior work teaches about the impact of liability insurance on tort cases (such as which cases are brought, who defends them, and who pays for them), extending Abraham and Sharkey’s claim that liability insurance affects the development of tort doctrine, and describing for the first time in one place how liability insurance relates to a set of potential foundations, justifications, functions, or objectives for tort law (compensation, deterrence, corrective justice, and retribution).

The normative contributions build on the descriptive, starting with the observation that the (un)availability of liability insurance strongly affects the nature of justice available within the domain of tort law. As the title of Stephen Perry’s classic article reminds us, tort theory should address “The Moral Foundations of Tort Law.”¹⁰ 10.Stephen R. Perry, The Moral Foundations of Tort Law, 77 Iowa L. Rev. 449 (1992) [hereinafter Perry, Moral Foundations].Show More I argue that this requires attending not only to the presence or absence of adequate justifications for tort liability, but also to the distribution of the right to the redress that tort liability provides. That requires considering who has liability insurance for what wrongs and whether what we find satisfies the minimal demands of whatever moral theory of tort law we find persuasive, whether that be corrective justice, civil recourse, utilitarianism, some mix of the foregoing, or something else.

Traditionally, tort theorists operating within the framework of moral philosophy have resisted being drawn into questions of distribution.¹¹ 11.See, e.g., Ernest J. Weinrib, Toward a Moral Theory of Negligence Law, 2 Law & Phil. 37, 38 (1983) (describing tort law as embodying corrective justice as opposed to distributive justice); Jules L. Coleman, The Mixed Conception of Corrective Justice, 77 Iowa L. Rev. 427, 433 (1992) (arguing that the moral principle of corrective justice cannot be satisfied by a distributive scheme of liability).Show More As they explain, generalized, community-wide distributive justice considerations cannot provide a compelling justification for providing compensation to tort victims rather than people injured in other ways.¹² 12.See, e.g., Ernest J. Weinrib, Corrective Justice in a Nutshell, 52 U. Toro. L.J. 349, 351–52 (2002); Coleman, supra note 11, at 435.Show More I agree, but the distribution of the right to corrective justice or civil recourse is different. As Stephen Perry first articulated, there is a local question of distribution that informs corrective justice.¹³ 13.Perry, Moral Foundations, supra note 10, at 461; see also Stephen R. Perry, On the Relationship Between Corrective and Distributive Justice, in 4 Oxford Essays in Jurisprudence 237, 237 (Jeremy Horder ed., 2000) (clarifying that while there is a normative connection between distributive justice and corrective justice, the two have different purposes and are conceptually independent).Show More Who among all the people with a causal relationship to an injury should bear the loss associated with that injury?¹⁴ 14.Perry, Moral Foundations, supra note 10, at 461.Show More That local question differs from questions of general distribution because there are agent-specific reasons to include someone in the local consideration set and agent-specific reasons for deciding who among that set should bear the loss.¹⁵ 15.Id.Show More

In later work, the legal philosopher John Gardner expanded Perry’s concept of local distribution to a more general “distribution of correction.” As Gardner explained, when courts or legislatures create tort law rules that give victims of some morally wrongful acts, but not others, a legal right to recourse from their wrongdoers, they are distributing the legal right to correction.¹⁶ 16.John Gardner, Torts and Other Wrongs 83–86 (2019).Show More I argue that tort theorists should attend not only to the gaps between moral and legal rights to correction, but also to the gaps between legal rights to correction and their actualization.

When tortfeasors do not have liability insurance, victims bear wrongful losses on their own, unless they are lucky enough to find that the wrongdoers have substantial assets. For everyone else facing an uninsured defendant, tort law provides only a pretense of the right to corrective justice. While there may not be a compelling basis in generalized, community-wide distributive justice for providing compensation to these victims rather than others, there is a compelling basis in corrective justice, which supplies the agent-specific obligations of the tortfeasors who could be made to pay—if they had the liability insurance that the present structure of the liability insurance market does not provide them.¹⁷ 17.See infra Part IV.Show More

Retributive justice provides yet another reason for tort theorists to reexamine their decision to set liability insurance considerations aside. As Jules Coleman explained at the dawn of corrective justice theory, retributive justice does not provide an adequate moral foundation for tort law.¹⁸ 18.See Coleman, On the Moral Argument, supra note 7, at 481–82; Coleman, Justice and the Argument, supra note 7, at 174–75.Show More But that does not mean (and he never contended) that retribution has no place in tort law or theory.¹⁹ 19.Coleman, Justice and the Argument, supra note 7, at 177–78; see also Scott Hershovitz, Treating Wrongs as Wrongs: An Expressive Argument for Tort Law, 10 J. Tort L. 405, 408 (2017) (arguing that tort liability expresses the judgment that the defendant has wronged the plaintiff); David G. Owen, Deterrence and Desert in Tort: A Comment, 73 Calif. L. Rev. 665, 666 (1985) (describing punishment and compensation as the two broad functions of tort law).Show More Indeed, Tony Honoré has suggested that considerations of retributive justice should “temper[]” the corrective justice that tort law provides.²⁰ 20.Honoré, supra note 8, at 90.Show More Moreover, as any successful plaintiff lawyer can attest, retribution is alive and well in civil justice, as demonstrated by the extent to which plaintiff lawyers work to arouse jurors’ feelings of outrage and condemnation.²¹ 21.Tom Baker, Transforming Punishment into Compensation: In the Shadow of Punitive Damages, 1998 Wis. L. Rev. 211, 226–28 [hereinafter Baker, Transforming Punishment]; cf. Kenneth S. Abraham, Shadow Tort Law: Lessons from the Reptile, 122 Colum. L. Rev. F. 110, 114–15 (2022) (describing plaintiff lawyers’ efforts to appeal to jurors’ instincts to protect themselves and their communities from wrongdoing).Show More

Where corrective justice provides reasons to attend to the gaps created by the absence of liability insurance (and reasons to encourage its presence), retributive justice provides reasons to attend to the presence of liability insurance. These latter reasons cut in two directions. On the one hand, the presence of liability insurance may ameliorate concerns about disproportionate liability—because an insurer, not the less-than-fully culpable defendant, will pay the damages.²² 22.Honoré, supra note 8, at 90.Show More On the other hand, the presence of liability insurance may raise retributive justice concerns when that insurance insulates culpable, solvent defendants from financial consequences for serious wrongs.²³ 23.See infra Section III.D.Show More

* * *

The Article proceeds as follows. Part I addresses the impact of liability insurance on tort law in action. Part II addresses the impact of liability insurance on tort doctrine. Part III addresses the relationship of liability insurance to the compensation, deterrence, corrective justice, and retributive justice provided by tort law.

Part IV takes a more explicitly normative turn, making the case for tort theorists to incorporate insurance considerations into their normative analysis. In that regard, I argue that tort theory should acknowledge the role that liability insurance can play in promoting corrective justice and civil recourse, and it should attend to features of liability insurance law and practice that limit the distribution of corrective justice and civil recourse. With regard to retribution, I argue that private law theorists should recognize the role that liability insurance practice has played in suppressing the retributive aspects of tort law, making contemporary tort law more about deterrence and corrective justice than the desire for vengeance out of which tort law arguably emerged.²⁴ 24.See David J. Seipp, The Distinction Between Crime and Tort in the Early Common Law, 76 B.U. L. Rev. 59, 59–60 (1996); Mark A. Geistfeld, Hidden in Plain Sight: The Normative Source of Modern Tort Law, 91 N.Y.U. L. Rev. 1517, 1522–23, 1529 (2016) (arguing that Holmes overstated the retributive origins of tort law); cf. Scott Hershovitz, Tort as a Substitute for Revenge, in Philosophical Foundations of the Law of Torts 86, 98 (John Oberdiek ed., 2014) (arguing for understanding revenge in corrective justice terms).Show More

Part V turns to Abraham and Sharkey’s central normative claim: that courts should take liability insurance into account when making tort doctrine. I first provide reasons within the domain of moral philosophy to support that claim in certain cases. For example, where there are historical gaps in tort liability that raise significant questions about the existing distribution of correction, the presence of a robust market for insurance that would cover liability for wrongs in those gaps could be relevant to a court deciding whether the time had come to fill or narrow those gaps. Liability insurance promotes corrective justice by providing an institutional structure that allows victims to recover from wrongdoers and, thus, all other things being equal, courts do more to promote corrective justice when they channel tort doctrine toward liability insurance. Thus, the existence of relevant liability insurance should provide a thumb on the scale in favor of narrowing the gap between moral and legal conceptions of corrective justice.

I part ways with Abraham and Sharkey in circumstances in which (a) there is not an existing liability insurance market that would cover the kind of liability in question or (b) the defendants (or other interested parties) contend that changing tort doctrine would destabilize an existing liability insurance market. I provide conceptual and empirical reasons to support my view that courts and other lawmakers should not make liability decisions that are based on predictions about what kinds of liabilities are capable of being insured as a technical or actuarial matter. Such decisions are unlikely to support the goals of tort law explored earlier, and courts lack the institutional competence to make reliable predictions about the effect of their decisions on the liability insurance market. Insurance is “an uncertain business” in which insurers regularly insure uncertain risk.²⁵ 25.Richard V. Ericson & Aaron Doyle, Uncertain Business: Risk, Insurance, and the Limits of Knowledge 5, 16 (2004); Tom Baker, Uncertainty > Risk: Lessons for Legal Thought from the Insurance Runoff Market, 62 B.C. L. Rev. 59, 65 (2021).Show More If insurers cannot reliably predict what can and cannot in the long run be insured, there is little reason to believe that courts will do any better. To this extent I disagree with Abraham and Sharkey and with judicial decisions such as those that cut back on strict products liability on the grounds that it would be impossible to insure against an uncertain risk.²⁶ 26.See, e.g., Anderson v. Owens-Corning Fiberglas Corp., 810 P.2d 549, 559 (Cal. 1991) (providing an insurance market justification for requiring trial courts to instruct the jury on the “state of the art” defense).Show More

* * *

Before proceeding, I should mention an understanding about the history of tort law that many legal historians and legal scholars have so internalized that we sometimes forget to express.²⁷ 27.Thank you to Sandra Mayson for prompting me to make this point explicit.Show More It is only a slight exaggeration to say that tort law as we know it has never existed in the United States without insurance. John Witt’s The Accidental Republic and Kenneth Abraham’s The Liability Century stand out for me as the leading monographs making this case.²⁸ 28.Kenneth S. Abraham, The Liability Century: Insurance and Tort Law from the Progressive Era to 9/11, at 172–73 (2008) [hereinafter Abraham, The Liability Century]; see also Kenneth S. Abraham, Free Speech, Breathing Space, and Liability Insurance, 111 Va. L. Rev. 1007, 1015 (2025) (recognizing the unsung role of insurance markets even in providing “financial protection against speech-tort liability,” a topic not addressed in The Liability Century). See generally John Fabian Witt, The Accidental Republic: Crippled Workingmen, Destitute Widows, and the Remaking of American Law (2004).Show More As their work shows, there never was a stable set of tort law doctrines and causes of action upon which insurance institutions subsequently acted. Rather, modern tort law and liability insurance emerged and evolved together.

Despite that history, all leading tort theory proceeds as if there were a primary institution called “tort law” upon which another, secondary institution called “insurance” acts. Although that is decidedly not my perspective, I am writing this Article for four audiences that take this perspective, at least as a starting point: judges making tort doctrine; students taking a tort law class; torts teachers who teach torts from that perspective but want to consider ways to better prepare their students; and philosophically oriented tort theorists. For that reason, my description starts from that perspective as well.

1.  See infra Section III.A. ↑
2.  See infra Sections III.B–C; Kenneth S. Abraham, Liability Insurance and Accident Prevention: The Evolution of an Idea, 64 Md. L. Rev. 573, 580 (2005). ↑
3.  Kenneth S. Abraham & Catherine M. Sharkey, The Glaring Gap in Tort Theory, 133 Yale L.J. 2165 (2024). ↑
4.  Id. at 2169. ↑
5.  Id. at 2191. ↑
6.  Id. at 2242. ↑
7.  See, e.g., Jules L. Coleman, On the Moral Argument for the Fault System, 71 J. Phil. 473, 487 (1974) [hereinafter Coleman, On the Moral Argument]; Jules L. Coleman, Justice and the Argument for No-Fault, 3 Soc. Theory & Prac. 161, 164–65 (1974) [hereinafter Coleman, Justice and the Argument]. ↑
8.  See, e.g., Jules L. Coleman, Risks and Wrongs 198 (1992); John C.P. Goldberg, Unloved: Tort in the Modern Legal Academy, 55 Vand. L. Rev. 1501, 1519 (2002); Gregory C. Keating, Reasonableness and Risk: Right and Responsibility in the Law of Torts 290 (2022) (“[N]othing in negligence liability forbids injurers from insuring against potential liability, but nothing in negligence liability requires it either.”). For a notable exception, see Tony Honoré, The Morality of Tort Law—Questions and Answers, in Philosophical Foundations of Tort Law 73, 85–90 (David G. Owen ed., 1995). ↑
9.  Abraham & Sharkey, supra note 3, at 2231–33 (suggesting that deontic theories should accommodate “instrumental and policy-based considerations” implicated by the presence or absence of liability insurance). ↑
10.  Stephen R. Perry, The Moral Foundations of Tort Law, 77 Iowa L. Rev. 449 (1992) [hereinafter Perry, Moral Foundations]. ↑
11.  See, e.g., Ernest J. Weinrib, Toward a Moral Theory of Negligence Law, 2 Law & Phil. 37, 38 (1983) (describing tort law as embodying corrective justice as opposed to distributive justice); Jules L. Coleman, The Mixed Conception of Corrective Justice, 77 Iowa L. Rev. 427, 433 (1992) (arguing that the moral principle of corrective justice cannot be satisfied by a distributive scheme of liability). ↑
12.  See, e.g., Ernest J. Weinrib, Corrective Justice in a Nutshell, 52 U. Toro. L.J. 349, 351–52 (2002); Coleman, supra note 11, at 435. ↑
13.  Perry, Moral Foundations, supra note 10, at 461; see also Stephen R. Perry, On the Relationship Between Corrective and Distributive Justice, in 4 Oxford Essays in Jurisprudence 237, 237 (Jeremy Horder ed., 2000) (clarifying that while there is a normative connection between distributive justice and corrective justice, the two have different purposes and are conceptually independent). ↑
14.  Perry, Moral Foundations, supra note 10, at 461. ↑
15.  Id. ↑
16.  John Gardner, Torts and Other Wrongs 83–86 (2019). ↑
17.  See infra Part IV. ↑
18.  See Coleman, On the Moral Argument, supra note 7, at 481–82; Coleman, Justice and the Argument, supra note 7, at 174–75. ↑
19.  Coleman, Justice and the Argument, supra note 7, at 177–78; see also Scott Hershovitz, Treating Wrongs as Wrongs: An Expressive Argument for Tort Law, 10 J. Tort L. 405, 408 (2017) (arguing that tort liability expresses the judgment that the defendant has wronged the plaintiff); David G. Owen, Deterrence and Desert in Tort: A Comment, 73 Calif. L. Rev. 665, 666 (1985) (describing punishment and compensation as the two broad functions of tort law). ↑
20.  Honoré, supra note 8, at 90. ↑
21.  Tom Baker, Transforming Punishment into Compensation: In the Shadow of Punitive Damages, 1998 Wis. L. Rev. 211, 226–28 [hereinafter Baker, Transforming Punishment]; cf. Kenneth S. Abraham, Shadow Tort Law: Lessons from the Reptile, 122 Colum. L. Rev. F. 110, 114–15 (2022) (describing plaintiff lawyers’ efforts to appeal to jurors’ instincts to protect themselves and their communities from wrongdoing). ↑
22.  Honoré, supra note 8, at 90. ↑
23.  See infra Section III.D. ↑
24.  See David J. Seipp, The Distinction Between Crime and Tort in the Early Common Law, 76 B.U. L. Rev. 59, 59–60 (1996); Mark A. Geistfeld, Hidden in Plain Sight: The Normative Source of Modern Tort Law, 91 N.Y.U. L. Rev. 1517, 1522–23, 1529 (2016) (arguing that Holmes overstated the retributive origins of tort law); cf. Scott Hershovitz, Tort as a Substitute for Revenge, in Philosophical Foundations of the Law of Torts 86, 98 (John Oberdiek ed., 2014) (arguing for understanding revenge in corrective justice terms). ↑
25.  Richard V. Ericson & Aaron Doyle, Uncertain Business: Risk, Insurance, and the Limits of Knowledge 5, 16 (2004); Tom Baker, Uncertainty > Risk: Lessons for Legal Thought from the Insurance Runoff Market, 62 B.C. L. Rev. 59, 65 (2021). ↑
26.  See, e.g., Anderson v. Owens-Corning Fiberglas Corp., 810 P.2d 549, 559 (Cal. 1991) (providing an insurance market justification for requiring trial courts to instruct the jury on the “state of the art” defense). ↑
27.  Thank you to Sandra Mayson for prompting me to make this point explicit. ↑

28.  Kenneth S. Abraham, The Liability Century: Insurance and Tort Law from the Progressive Era to 9/11, at 172–73 (2008) [hereinafter Abraham, The Liability Century]; see also Kenneth S. Abraham, Free Speech, Breathing Space, and Liability Insurance, 111 Va. L. Rev. 1007, 1015 (2025) (recognizing the unsung role of insurance markets even in providing “financial protection against speech-tort liability,” a topic not addressed in The Liability Century). See generally John Fabian Witt, The Accidental Republic: Crippled Workingmen, Destitute Widows, and the Remaking of American Law (2004). ↑