Liability insurance is profoundly imbedded in today's society, as evidenced by the broad use of compulsory (e.g. driver insurance) and optional contracts (e.g. family liability insurance). In this respect, insurance plays a key role in protecting the insured against the risks of liabilities imposed. At the same time, tort law is becoming more important as victims feel more entitled to receive compensation. As negligence still forms the base of tort law, strict liabilities increase, often with a link to liability insurance. Nevertheless, it is documented that insurance might induce moral hazard. Acting carefully becomes less important, if the financial consequences of liability can be shifted to the insurer. Hence, insurance companies need instruments to prevent this behaviour. To reconcile these two objectives, a balanced legislative approach is needed: too much focus on protection might give too much leeway to moral hazard offenders leading to adverse selection or inadequate premiums, while too much focus on prevention might, for instance, cause unwarranted exclusions of insurance applicants. Although the subject of insurance protection and moral hazard prevention has been studied separately in the existing law literature, no study has investigated whether there is a balance between both elements in Belgian insurance law. This project examines the prevalence of the 'protective' and 'preventive' motive in the Belgian insurance law.
In view of the social importance of the research subject and the fact that moral hazard essentially deals with behaviour, the subject will not only be studied from an insurance law viewpoint, but also from an empirical viewpoint (psychology and the law and sociology and the law). More specifically, the project focuses on the examination of the legal framework of liability insurance and on the question if adequate protection is (still) offered to the insured. Given the fact that moral hazard is based on the assumption that insured have knowledge of the policy terms, it needs to be investigated whether this is true. The theory of legal consciousness will be used as a legal framework.
The legal and empirical viewpoint will enrich the scientific study on insurance law and will give useful insights on the question how insurance regulation can be adapted to the legal consciousness. This project will also benefit the evidence-based knowledge of legal consciousness in the field of sociology and the law and psychology and the law.