1.1 Background and purpose

The background to liability insurance is of course liability, largely liability in tort rather than contract,1 liability in tort the response of society to the wrongdoer where something has gone wrong. For society the first issue is to identify the wrongdoer, and “to decide who should bear the loss resulting from an event”.2 This leads to the question, who is the superior risk bearer? In the view of Posner and Rosenfield in the USA, a “party can be a superior risk bearer for one of two reasons. First, he may be in a better position to prevent the risk from materializing”.3 Prevention, however, the argument continues, “is