Documentation:Torts/Insurance

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TORT LAW
CASEBOOK
Introduction
Dignitary Torts
Defamation • Discrimination • Harassment • Intentional infliction of mental suffering • Invasion of privacy • Trespass to the person
Property Torts
Interference with goods • Interference with land • Non-natural use of land • Private nuisance • Public nuisance
Negligence Tort
Duty of care • Breach of duty • Damage • Causation • Remoteness
Negligence Categories
Employment • Environmental pollution • Harmful products • Hosting patrons and guests • Infliction of mental injury • Misrepresentation • Occupation of premises • Professional services • Public authorities • Pure economic loss • Relational economic loss • Rescuers • Shoddy goods or structures • Treatment of indigenous children • Unborn children
Dishonesty & Abuse of Position Torts
Abuse of process • Breach of confidence • Conspiracy • Fraud • Inducing breach of contract • Injurious falsehood • Intimidation • Malicious prosecution • Misfeasance in public office • Passing off • Spoliation • Unlawful interference with economic interests
Strict Liability
Keeping dangerous animals • Non-natural use of land • Ultrahazardous activities • Vicarious liability
Defences
Apportionment of liability • Consent • Defamation defences • Defence of property • Denials • Excuses • Illegality • Legal authority • Limitation • Necessity • Self-defence
Remedies
Apologies • Damages • Injunctions • Insurance • Legal costs • Mitigation • Proprietary
Tort Law & Legal Systems
Charter values • Class actions • Concurrent actions • Constitutional torts • Indigenous dispute resolution • No-fault compensation schemes
Tort Theory
Instrumental theories • Constructive theories • Critical theories • Reflexive theories
Study Resources
1L strategy • Answer exercises • Quizzes • Beswick's course site • Opening Up Tort Law Project
Index
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Insurance

Insurance is an agreement in which an individual makes payments, known as premiums, to an insurance company which will pay out money to cover costs arising from certain events, such as car accidents and house fires.[1] In certain circumstances, such as motor vehicle insurance, government legislation makes it mandatory for individuals to purchase insurance.[2] However, other forms of insurance, such as personal life insurance, are optional.[3] Insurance can be provided by either public government entities, or private corporations.[4]

Insurance is particularly important in tort law because the defendant's insurance company—rather than the defendant themselves—is often the party that pays out compensation to the successful plaintiff.[5] As such, there is some debate as to whether insurance facilitates the tort system[6] or undermines it by allowing wrongdoers to escape personal accountability.[7]

Insurance in motor vehicle incidents

In the news
Tribunal finds woman drove into flooded road, denies claim
During the November 2021 floods in BC, a woman whose car was damaged in a flooded road had her claim denied by ICBC, since she herself had "drove into the flooded road" which caused the damage.[8]

In many jurisdictions around the world, owners and operators of motor vehicles are mandated by legislation to carry some sort of insurance. In British Columbia, such mandatory insurance is offered by the Insurance Corporation of British Columbia (ICBC), a provincial Crown corporation.[9] The rationale behind mandatory car insurance is to ensure that those injured in a collision aren't "left to bear the loss" by themselves, but are instead covered by the scheme.[10]

Even when the parties to the collision are covered by insurance, under the tort of negligence the court must still make a finding of fault. In Nettleship v. Weston, Mr. Nettleship was helping teach Ms. Weston, a learner, how to drive. During a turning maneuver, the learner caused the car to collide with a lamp post, and Mr. Nettleship was injured as a result.[11] On appeal, Lord Denning commented on the relationship between tort principles and the reality of insurance, noting that if the driver were not found at fault, then the injured passenger wouldn't get receive compensation from the driver's insurer.[12] On the facts, the two individuals were "regarded as equally to blame" and fault was equally divided between the two.[13]

No-fault insurance schemes

Certain jurisdictions have replaced the traditional tort-based system backed by motor vehicle personal injury insurance, with a 'no-fault' compensation scheme. In British Columbia, this change occurred in 2021.[14]

Compensating advantages

In the common law, it is generally understood that benefits received by a plaintiff through private insurance will not be deducted from a damages award. However, this rule is subject to certain exceptions.[15]

For example, if damages are awarded in a fatal injuries claim, the court will not deduct the value of Canada Pension Plan benefits available to surviving dependents. Courts may deduct sick leave benefits from the damages paid for loss of earning if an employees negligence was responsible for the injuries. However, such benefits are not deductible if the plaintiff has paid insurance premiums by themselves to obtain such benefits (i.e., the plaintiff "prudently obtained and paid for insurance"). If the plaintiff has "not contributed to acquire the benefit", courts might be more willing to deduct the benefit from damages.[16]

Insurance and tort law

The existence and development of insurance has had a profound impact on the development and evolution of modern tort law. In many cases, the only reason a plaintiff pursues the defendant is because the defendant is insured. Otherwise, there would be no utility in pursuing a defendant who is not able to cover the damages which were awarded or is judgment-proof.[17]

The evolution of tort law has also influenced the development of insurance. Certain forms of insurance, such as liability insurance, arose in direct response "to the risk of being held liable in law".[17] Parties that are insured under such policies are covered (subject to certain limits and exceptions) in the event that they are found civilly liable in court.[17]

Judgment-proofing

Insurance which is held by one or both parties in a case may help with the recovery of damages when the defendant is judgment-proof. Judgment-proof entities are those who either have insufficient assets to cover the awards, or whose income or assets are not legally accessible.

Some organizations deliberately engage in the practice of "judgment-proofing" to evade the payment of damages. Judgment-proofing is common in in high-risk industries, such as tobacco and asbestos. To counteract both intentional and unintentional judgment-proofing, governments can legislate that adequate insurance is mandatory for participation in certain activities.[18]

Personal responsibility

Some argue that the reality of comprehensive insurance means that tort law can no longer hold people and organizations accountable, since damages aren't paid by the defendant personally, but rather their insurance provider. In many areas where incidents frequently occur, such as car accidents, workplace accidents, and in medical settings, the costs arising from tort liability and litigation are borne by insurance providers rather than individuals themselves.[19] In the "great majority" of such cases, compensation paid to the plaintiff doesn't come directly from the defendant, but instead the entity which insured the defendant.[20] Therefore, in such situations tort law might not be considered as directing holding "wrongdoers to account".[20] While this may absolve some tortfeasors of the more personal aspects of responsibility for their actions, the existence of insurance is still quite beneficial for plaintiffs. In cases where a defendant is insolvent or can't cover the damages they owe, insurance picks up the "tort tab" and gives plaintiffs the redress they're entitled to.[20]

Car crashed into a tree
Even under a 'no-fault' scheme, drivers who cause collisions will face higher insurance premiums

Further ,there are some mechanisms where accountability and responsibility in spheres dominated by insurance can still be upheld. Providers of insurance can increase premiums for high-risk entities, or might refuse coverage altogether if an individual has a poor previous record (e.g., multiple vehicular collisions). The government can also enact other measures, such as criminal and regulatory offences, to keep people accountable for their behaviour. In the case of driving, an individual may face a variety of sanctions outside of the scope of tort law for dangerous actions.[19][20] Insurance providers such as ICBC may also refuse coverage when a driver was under the influence at the time of the incident, was engaging in street racing, or attempting to flee the police.[9]

In British Columbia, ICBC conducted a telematics-based study in 2020 and 2021.[21] In this study, participant's vehicles were equipped with a data collection device that was used to collect driving-related metrics.[21] The device could detect high-risk behaviours, such as rapid acceleration, speeding, and harsh braking.[21] Based on the results of the pilot project, ICBC might consider rolling out telematics on a wider-scale in the future to connect insurance premiums with driver behaviours.[21] Such a proposal would be highly controversial.

Motor Vehicle Act – British Columbia
Motor Vehicle Act, RSBC 1996, c 318, s 3 and 79.[22]
Registration, licence and insurance

3 (1) Except as otherwise provided under this Act, the owner of a motor vehicle or trailer must, before it is used or operated on a highway,


(a) register the motor vehicle or trailer with the Insurance Corporation of British Columbia,

(b) obtain a licence for its operation under this section, and

(c) obtain for it an owner's certificate under the Insurance (Vehicle) Act.


(3) The owner must apply for


(a) registration and licence in the form required by the Insurance Corporation of British Columbia, and

(b) a motor vehicle liability policy.


Arrest without warrant

79 An officer or constable of the Royal Canadian Mounted Police or of the police department of a municipality may arrest without warrant


(b) a person driving a motor vehicle who the officer or constable has reasonable and probable grounds to believe is not insured as required by this Act or does not hold a valid and subsisting motor vehicle liability insurance card or financial responsibility card, and may detain the person arrested until he or she can be brought before a justice to be dealt with according to law.

Discussion questions

  • Even though insurance may cover part or all of the damages a defendant must pay, what are some ways that insurance providers can still keep individuals and companies accountable for their behaviour?
  • Why do you think it is mandatory in most jurisdictions for vehicle owners to hold valid insurance on the cars they drive?
  • Does the presence of insurance make the tort system more beneficial for plaintiffs?
  • When awarding damages, should courts take into account what type of insurance (if any) the defendant holds or whether the defendant had the ability to acquire liability insurance in relation to the incident?
  • Do you think modern tort law would be able to operate effectively without insurance?
  1. ↑ Ashburn, Nancy (17 April 2024). "What is insurance and how does it work?". Britannica Money.
  2. ↑ Government of Canada (30 October 2023). "Car Insurance". Government of Canada.
  3. ↑ Government of Canada (1 December 2023). "Optional mortgage insurance products". Government of Canada.
  4. ↑ Kagan, Julia (28 February 2024). "Insurance: Definition, How It Works, and Main Types of Policies". Investopedia.
  5. ↑ Zipursky, John CP; Goldberg, Benjamin C (2020). Recognizing Wrongs. Cambridge: Harvard University Press. p. 274.
  6. ↑ Goldberg, John CP; Zipursky, Benjamin C (2020). Recognizing Wrongs. Cambridge: Harvard University Press. pp. 274–276.
  7. ↑ Hedley, Steve (2016). "Corrective Justice—An Idea Whose Time Has Gone?". In Del Mar, Maksymilian; Lobban, Michael (eds.). Law in Theory and History: New Essays on a Neglected Dialogue. Oxford: Hart Publishing. pp. 322–323.
  8. ↑ Hainsworth, Jeremy (31 May 2023). "Tribunal finds B.C. woman drove into flooded road, denies damage claim". Vancouver is Awesome.
  9. ↑ 9.0 9.1 "ICBC Autoplan insurance: Your guide to insuring, registering and licensing your vehicle" (PDF). Insurance Corporation of British Columbia. June 2023. Archived (PDF) from the original on 25 June 2022. Retrieved 17 July 2023.
  10. ↑ Nettleship v. Weston, [1971] EWCA Civ 6 (§20.3.1) at para 12.
  11. ↑ Nettleship v. Weston, [1971] EWCA Civ 6 (§14.1.1.2) at paras 1-5.
  12. ↑ Nettleship v. Weston, [1971] EWCA Civ 6 (§20.3.1) at para 23.
  13. ↑ Nettleship v. Weston, [1971] EWCA Civ 6 (§20.3.1) at paras 23–24.
  14. ↑ Law Students' Legal Advice Program (1 August 2023). "Law Students' Legal Advice Manual" (PDF). LSLAP: 522.
  15. ↑ IBM Canada Limited v. Waterman, 2013 SCC 70 (CanLII) at para 41.
  16. ↑ IBM Canada Limited v. Waterman, 2013 SCC 70 (CanLII) at paras 43–46.
  17. ↑ 17.0 17.1 17.2 Cane, Peter (1991). "Insurance and Tort Law". Tort Law and Economic Interests. Oxford Academic. pp. 432–461.
  18. ↑ Morgan, Philip (2020). "Judgment-Proofing Voluntary Sector Organisations from Liability in Tort". Canadian Association of Comparative and Contemporary Law. 6: 235–237 – via CanLII.
  19. ↑ 19.0 19.1 Hedley, Steve (2016). "Corrective Justice—An Idea Whose Time Has Gone?". Law in Theory and History: New Essays on a Neglected Dialogue. Hart Publishing. pp. 232–233.
  20. ↑ 20.0 20.1 20.2 20.3 Goldberg, John C. P. & Zipursky, Benjamin C. (2020). Recognizing Wrongs. Harvard University Press. pp. 274–276.CS1 maint: multiple names: authors list (link)
  21. ↑ 21.0 21.1 21.2 21.3 "ICBC's Techpilot project". Insurance Corporation of British Columbia. Retrieved 17 July 2023.
  22. ↑ Motor Vehicle Act, RSBC 1996, c 318, s 3 and 79.
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