Liability Insurance, Moral Luck, and Auto Accidents

Abstract

Beginning with the seminal work by Williams and Nagel, moral philosophers have used auto accident hypotheticals to illustrate the phenomenon of moral luck. Moral luck is present in the hypotheticals because (and to the extent that) two equally careless drivers are assessed differently because only one of them caused an accident. This Article considers whether these philosophical discussions might contribute to the public policy debate over compensation for auto accidents. Using liability and insurance practices in the United States as an illustrative example, the Article explains that auto liability insurance substantially mitigates moral luck and argues that, as a result, the moral luck literature is unlikely to make a significant contribution to this public policy debate. The debate would benefit more from philosophical analysis of victims' luck, which is not as substantially mitigated by liability insurance. Disciplines Insurance Law | Law and Philosophy CommentsAt the time of this publication, Tom Baker was affiliated with the University of Connecticut School of Law, but he is now a faculty member at the University of Pennsylvania.

The Law and Economics of Liability Insurance: A Theoretical and Empirical Review

“…Most states have some modest insurance requirements for automobile use, although these are frequently under-enforced and typically set at much lower levels of coverage than the maximum liability a driver can cause. (For details, see Baker (2008).) In the Smith and Wright (1992) model, mandating insurance (or enforcing existing mandates) can lower premiums and raise welfare.…”

Moral Luck and the Law

“…And here, of course, tort law may be very different from criminal law. Tort law, after all, is primarily – even if not completely – about money, and indeed often about insurance more than about more private money (Baker). So perhaps violating proportionality is much less problematic in tort law than in criminal law (Perry).…”