Should insurers decide to pay based on ‘moral’ considerations?

I agree with the reasoning reflected in this post — insurers’ obligations to pay must be determined by the language of the contract and the facts of the event, not squishy concepts of what people need when they suffer a loss. And I have to say that if I didn’t agree with it, engaging in coverage analysis and litigation, whether for insurers or policyholders, would be the wrong field for me: the right field for me would be politics, where you can say anything you want, no matter how stupid, as long as you posit some supposed moral imperative.

Now, contract interpretation and performance are not inherently amoral — Kant’s concept of a categorical imperative would say the same thing.  Obviously, bad faith laws also recognize that there is a duty to treat others as you would be treated yourself. But that is not what we’re talking about.  Instead, we are talking about the idea that deciding to just say the heck with the contract and pay to each according to his need can itself be an immoral act.  If you don’t buy that, run it through Kant’s three categorical imperatives and you will see that I am right. That is as much philosophy as I am going to talk today, because I have a friend who has an advanced degree in philosophy and he is the kind who always wants to correct some aspect of what you say about any given ethos. So the less I say, the less the danger I will have to listen to him. 

One last thing. In writing this post, I was doing some channel surfing on the Web, going from a search window on, say,  NFL mock drafts to a search window on morality in contract law, and I ran across this scholarly article.  Let me ask you a favor.  Read the first big paragraph, and give me a summary in one sentence of 20 words or less of what the author is saying. I am almost totally at a loss as to what is being said, but here is my guess: "Theories about how contracts should work depend on assumptions about how contracts actually do work, but these assumptions can be wrong."  You see? I couldn’t do it in less than 21, and my guess may be way off base. I made a determined effort to read this article, mostly out of curiosity as to what the author is talking about, but I got to only about page 8.  The biggest stumbling block? Besides the obvious, the word qua is used, and I hate the word qua. If I met qua on the street I might physically attack it — at the very least I would call the authorities. About page 8 these resentments built up to such a degree I couldn’t go on.

3 Comments

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3 Responses to Should insurers decide to pay based on ‘moral’ considerations?

  1. If I saw a qua on the street, I’d beat it with a stick. It would be the moral thing to do.

  2. Note the date 9/22/2005. How can insurance companies say the courts have just rewritten the contracts? These risks were calculated in the rates pre-Katrina!

  3. To some extent, as my friend Randy Maniloff pointed out in a recent article on the difficulty of predicting the outcome of coverage cases, the terms of an insurance contract don’t mean anything until a court says what they mean — and this can vary by jurisdiction and even by judge within the same jurisdiction. So on one level, saying courts rewrite a contract is a basic level observation: insurance contracts from the 1960s and 1970s didn’t contemplate coverage for sexual abuse and large scale environmental pollution, but this is the way they have been interpreted in the realities of the later facts and the needs of society. What I am driving at is I recognize the common law will always have cycles and show evolution, and coverage law is almost entirely driven by the common law, not statute. In Katrina cases, the contracts in large measure were upheld: flood exclusions, except for Judge Duvall in Louisiana federal court, have been upheld, as has the principle against insuring twice for the same first-party risk. In some other areas, the anti-concurrent language regarding first-party property loss has been questioned, but I’ve stated my position on that a number of times — the anti-concurrent language, which if you read a homeowners contract you will see appears in the section about first-party property loss but not in the third-party liability section because tort principles will apply to the latter but not the former, is really not necessary to consider when deciding most or all of the Katrina cases.
    I’m not sure I follow the point about the calculation of losses pre-Katrina. The rates charged don’t necessarily reflect on a court’s interpretation of a policy’s terms, and courts seldom consider the precise amount paid in premiums in analyzing policy language.