Joint and Several Liability – The 1% Solution
One of the cornerstones of negligence law is the principle of “joint and several liability”.
With “several liability”, each defendant found liable is only responsible to pay his or her proportionate share of the damages. But with “joint and several liability”, a successful plaintiff can recover all of his or her damages from any of the defendants found liable regardless of the percentage of fault attributed to them. It is left to the defending parties to sort out between themselves who pays what.
The underlying rationale for this principle is to protect victims from being under-compensated in the event one of the defendants is unable to pay his or her share of the judgment. It is thought that between the innocent victim and any one of the defendants, it is more appropriate that the latter bear the burden of any shortfall. This is particularly so because, in most cases, it is insurers who cover the loss.
This can result in a defendant (most often their insurers) paying more than their proportionate share when the other defendants do not have enough insurance or assets to cover their share. As a result, it is also called the “1% Rule”, because all it takes is a finding of 1% liability to potentially put you on the hook for all of the damages.
Not surprisingly, many parties with “deep pockets” don’t like this rule. However, with proper insurance coverage and risk management, they can protect themselves. The insurance industry is in the business of assessing risks and absorbing losses. Insurers distribute these losses across all of their policy holders through the premiums they charge. But with proper risk management everyone benefits, because the loss does not occur in the first place. The plaintiff is not injured, the insurer does not have to pay, premiums are lower and we are all safer for it.
Without joint and several liability, you place innocent victims at risk of not being completely compensated and you remove the motivation for risk management. For those reasons, it should be seen as the “1% Solution”.
If you have more questions about several liability, contact our Personal Injury and Wrongful Death Group.