Restatement of the Law, Liability Insurance: Now Available
Restatement of the Law, Liability Insurance is now available to purchase on ALI’s website. The Restatement is organized into four chapters covering a range of liability insurance law topics: Basic Liability Insurance Contract Rules; Management of Potentially Insured Liability Claims; General Principles Regarding the Risks Insured; and Enforceability and Remedies.
From the Foreword by ALI Director Richard L. Revesz:
The publication of the Restatement of the Law, Liability Insurance, The American Law Institute’s first foray into this area, marks an important moment in our institutional life. Liability insurance is a significant component of the American economy. Many thousands of claims are handled every day under homeowner’s and automobile policies, commercial policies, and policies covering professionals, such as doctors and lawyers, as well as directors and officers of for-profit and nonprofit entities. A well-functioning liability-insurance market allows us to lead lives less inhibited by the threat of devastating liability, provides incentives to avoid unduly risky conduct, and compensates victims of serious harms.
Perhaps more so than other ALI projects, this Restatement touches on a wide range of legal fields, as reflected in its frequent citation to many other Restatements, principally: Contracts, Torts (including Liability for Economic Harm and Apportionment of Liability), Agency, Law Governing Lawyers, and Restitution and Unjust Enrichment. But that does not mean that the field is simply derivative of these other areas. Quite to the contrary, this Restatement reveals the extent to which the field evolved from its conceptual building blocks, rooted in the contractual agreement between insurer and insured, to address knotty questions of risk allocation governing decisions such as under what circumstances an insurer’s duty to defend its insured is triggered; how to balance an insurer’s right to control the defense with the policyholder’s right to a confidential relationship with counsel; when an insurer must accept a settlement offer from a claimant suing a policyholder; and when a policyholder may settle without insurer approval. Parties to insurance contracts must make these decisions, often involving large sums of money, before they can obtain a judicial declaration of their respective rights. Liability-insurance law also has developed doctrinal approaches to recurring issues of great practical importance, including how to identify events that trigger insurance coverage, how to apportion liability for indivisible harm that occurs over multiple insurance-policy periods, and the responsibilities of multiple insurers and of excess insurers. With respect to questions such as these, this Restatement will provide important guidance to the courts as well as to private parties making business decisions against the shadow of the law.
The American Law Institute would like to thank the Reporters, Tom Baker and Kyle Logue, project participants, and ALI members who contributed their time, wisdom, and guidance to the Restatement.