The Effect of Liability Environment on Tort System Costs: Evidence from Automobile Insurance

29 Pages Posted: 29 Sep 2005

See all articles by Robert E. Hoyt

Robert E. Hoyt

University of Georgia - C. Herman and Mary Virginia Terry College of Business

Lars Powell

University of Alabama - Culverhouse College of Commerce & Business Administration

Date Written: September 2005

Abstract

This study tests the relation between liability system environment and costs of the tort system. We employ a unique measure of liability environment calculated using responses from a survey conducted for the U.S. Chamber of Commerce. Measures of liability system costs are regressed on the measure of liability system environment. We find a consistent and strong negative relation between liability environment and costs of the liability system. Evidence also suggests that efforts to reduce moral hazard, reduce onerous price regulation, and increase driver safety will decrease automobile liability costs.

Keywords: Tort reform, Legal liability, Insurance

JEL Classification: K13, K41, G22

Suggested Citation

Hoyt, Robert E. and Powell, Lawrence, The Effect of Liability Environment on Tort System Costs: Evidence from Automobile Insurance (September 2005). Available at SSRN: https://ssrn.com/abstract=808404 or http://dx.doi.org/10.2139/ssrn.808404

Robert E. Hoyt

University of Georgia - C. Herman and Mary Virginia Terry College of Business ( email )

Athens, GA 30602-6255
United States
706-542-4290 (Phone)
706-542-4295 (Fax)

Lawrence Powell (Contact Author)

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States

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