Comparative negligence remains one of the biggest challenges noted in closed claim file audits. Certainly, plenty of claims are paid at 100%, or denied at 0%. There is even the occasional 50/50 claims thrown in for good measure. But all told, only about 3-5% of claims are closed with a comparative negligence assessment. Which begs the question, why is this such an ongoing challenge for insurers given the downsides of leakage, adverse insured retention and missed subrogation?
To begin to understand the concept of comparative negligence, lets go back to its beginnings. Comparative negligence doctrines evolved from the original concept of contributory fault. In Butterfield v. Forrester, 11 East 60, 103 Eng. Rep 926 (K.B. 1809) we learn that Forrester had left a pole against his home jutting into the road. Butterfield struck the pole, was injured and sued. Witnesses attested to the fast pace of Butterfield’s horse.
The King’s Bench instructed jurors that if the plaintiff contributed to his injuries in any way he would be barred from collection. The King’s Bench was the first appearance of contributory negligence as a common law defense against negligence.
Fast forward to 1928 and the case of Palsgraf v. Long Island Railroad. A man was boarding the train with the assistance of LIRR staff. He accidentally dropped a package containing fireworks which exploded causing injury to Palsgraf, who was at the other end of the train.
Palsgraf sued the railroad for injuries. Trial and appellate courts sided with the plaintiff. However, the Supreme Court reversed with jurist Benjamin Cardozo introducing the zone of danger theory. He said that a duty that is owed must be determined from the risk that can reasonably be foreseen under the circumstances. A defendant owes a duty of care only to those who are in the reasonably foreseeable zone of danger.
Along the way, there were several other key cases that led to the concept of comparative negligence, as the contributory approach was viewed as potentially harsh. In Davis v. Mann (1842), the last clear chance doctrine was established. Byrne v. Boadle (1863) established actual and proximate cause. In 1915, British Electric Railway v. Loach further established proximate cause. In 1931, Wisconsin became the first state to implement a comparative negligence law.
So here we are in 2021 and only 3-5% of claims are settled with comparative assessments. This is much different than the courts where jurors apportion liability more than half the time. It is estimated that 15% of all claims are closed with missed subrogation opportunities due to the lack of accurate liability decisions at a cost of $15 billion dollars to the industry. Not to mention some very unhappy policyholders who are out some, or all, of their deductible.
At a very minimum not applying comparative in situations prone to shared liability (lane change, intersection, slip and fall, liquor liability, etc.) is just poor claims handling. But what if it is systemic? What if there are a substantial number of claims where comparative should have been assessed that were not? Not only are insured’s out portions of their deductibles, but could a crafty trial lawyer create a much bigger cause of action?
No Cost Comparative Negligence Seminar
To help carriers, self-insured’s and TPA’s address this issue, we have created a no cost liability training seminar. Our session addresses comparative negligence from a practical standpoint. When it should be applied, proper statement taking and investigations, and most importantly, how to effectively negotiate an accurate outcome.
The training can be conducted remotely and the results have traditionally been an uptick in comp neg assessments which improve both settlement accuracy and subrogation recognition. As one who worked in the trenches of claims for many years, I have tried to tailor the class to be both information and fun, with a curriculum that encompasses the history of comp neg, practical application and interactive workshops. If you are interested in learning more, please contact me at firstname.lastname@example.org.
Chris Tidball is an Executive Claims Consultant with SecondLook, a leading claims support organization specializing in improving subrogation results. He has been in the insurance business for more than 30 years, starting as an adjuster and moving into management and executive roles with multiple Top 10 insurers. He is the author of multiple books including Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary! His liability seminars have been presented to multiple carriers across the United States and globally. To learn more visit www.secondlook.net or contact Chris at email@example.com.