1. How Does it Work? May, 2018 Jerry Mason (jerry@mslawid.com)
Why Insurance?
How Does it Work?
May, 2018
Jerry Mason

2. End of Sovereign Immunity
The King can do no wrong …
Government cannot be sued unless it gives permission – English rule
Purpose was to keep courts from being pre-eminent
Results of application – harsh results for those who have been harmed
Backing incident – may have triggered change
Options of developing the law:
Develop concept case-by-case or
Legislature could enact statute

3. If You Weren’t Insured …
Types of general risk
Damage to public property
Liability
Idaho Tort Claims Act
Same as private person (end of sovereign immunity)
Immunities
Procedures and damage limits
Unique public risks
Civil rights – no damage limits (compare to state law)
Terrorism – actions to influence public policy

4. Without Insurance (cont’d.)
Tax levy to pay judgment
Tort Claims Act requires employer to defend and pay damages …
If negligent conduct occurs “within course and scope of employment” (or volunteer service)
Agency would need to have funds for defense costs and payment of damages
Costs concentrated at moment of award

5. Handing the Risk to Someone Else
Insurance is based on the “law of large numbers” – odds are with you
Can’t transfer the risk of things that are certain to happen
Intentional acts v. accidents
Obligations to perform contract duties
Lawful exercise of discretion
Stabilizing costs avoiding unaffordable spikes

6. General Rules of Insurance
Exclusions are strictly construed
Tie goes to the insured
Ambiguity goes to the insured
Duty to defend extends beyond duty to pay damages
Counsel appointed by insurer is your attorney, but paid for by others
Idaho Tort Claims Act protects you – insured or not

7. Primary Coverage Forms
Tort Liability – origins in common law
Civil rights liability
Auto liability
Property damage
Machinery breakdown
Chemical spraying
Terrorism
Cyber liability

8. Exclusions From Coverage
Intended conduct (moral hazard of ITCA?)
Ultra-hazardous substances
Contract performance
Internal disputes – official v. official/agency v. agency
Punitive damages
Criminal or regulatory penalties
Things that cost too much given their known frequency

9. Super Risks – Often Uninsurable
Pollution
“Natural” hazards such as mold, fungus, floods, etc.
“Man-made” hazards such as asbestos, silica, etc.
Land use/eminent domain
Chemical application – often with little true coverage (ICRMP does cover)
War/riot/civil disturbance

10. Insurance or … Bearing your losses alone
Letting one year’s taxpayers carry all of the load
Causing your tax levy to spike or underfunding everything else
Let an actuary calculate your risk or have your risk “averaged” with other like entities
Fund risk exposures over time