The Tort System As Liability Insurance

This blog post makes some good points, but I don’t fully agree with the conclusions.  To the degree that the tort system works, it can be seen as an insurance mechanism.  True, it functions in a different way than an insurance contract, which is why the serious debate over the tort system, when you get past the bluster, is over setting efficient liability rules that allow just compensation for injuries, and finding rules that adequately address true injuries and don’t reward fake injuries.  The fact that businesses have liability insurance shows that insurance and tort theory intersect.  The hard part is trying to adjust liability rules so that what is "insured" through tort produces a benefit to society and doesn’t lead to inefficient allocation of capital, or serve merely as a redistribution of capital that is excessively dissipated through handling by courts and lawyers.     

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