ABSTRACT
The background to liability insurance is of course liability, largely liability in tort rather than contract, 1 liability in tort is the response of society to the wrongdoer where something has gone wrong. For society, the fi rst issue is to identify the wrongdoer and “to decide who should bear the loss resulting from an event.” 2 This leads to the question, who is the superior risk bearer? In the view of Posner and Rosenfi eld in the United States, a “party can be a superior risk bearer for one of two reasons. First, he may be in a better position to prevent the risk from materializing.” 3 Prevention, however, the argument continues, “is only one way of dealing with risk; the other is insurance,” 4 and, being risk averse, clearly liability insurance is what many if not most people prefer.
