Introduction

If you have ever ridden a public or private bicycle in the city of Boston—or any city really—you know there is a risk of injury to yourself, another, or another’s property.¹Samantha Nolan, Boston EMS 2020 Cyclist & Pedestrian Report, City of Bos. 5 (Apr. 2021), https://perma.cc/4YD4-8GAL (reporting 306 bicycle incidents in 2020 in the Boston and adjacent neighborhoods and identifying that in Boston about 50% of collisions resulted from motor vehicles, and about 50% resulted from collisions with pedestrians). Although BlueBikes (Boston’s public bike share program) offers a convenient and often fast way of commuting through the city, this service can lead to significant liability.²See Liability Waiver, Release, Indemnification, and Voluntary Assumption of Risk (the “Release”), BlueBikes (Nov. 2, 2023), https://perma.cc/6S8K-PJLK (indicating that by using BlueBikes’ services, the user assumes all risk and liability). This means that a collision with a car or a person could result in hundreds of thousands of dollars in damages, and the bike rider could be held liable for the entire amount.³See Cyclists Collide: Massachusetts Bicycle Accident Case Settled for $350,000 by Boston Bike Injury Lawyer, Spada L. Grp., https://perma.cc/LJ4H-FS9C (last visited April 5, 2024). In the United States, a possible payment by homeowner’s or renter’s insurance could offset this amount—insurances a third of the population does not have or cannot afford.⁴See Does Insurance Cover Bicycle Accidents?, Progressive, https://perma.cc/93BP-SJLY (last visited Apr. 5, 2024) (advising that in some cases a policyholder’s homeowners insurance or renters insurance would cover damages inflicted by the policyholder on a bicycle who inflicts damage on other’s property). In Germany, on the other hand, the biker is likely insured by a policy which will cover liability for damages up to about €50 million.⁵Jen Palacios, Best Liability Insurance in Germany [2024 Comparison], Simple Ger., https://perma.cc/8BAW-B6L3 (last updated Mar. 25, 2024) (providing information as to what personal liability insurance in Germany costs, does and does not insure; also indicating that even amongst these newer insurers, the policies can cover damages up to an amount of €50 million). This private liability insurance, or Privathaftpflichtversicherung, is one of the most popular insurances on the German insurance market.⁶Hedda Nier, Die Versicherungen der Deutschen, Statista (June 28, 2019), https://perma.cc/2YSL-V5FU (showing that 83% of German households have a personal liability insurance).

This Note will argue that the German model of offering personal general liability insurance as a standalone policy should become a common practice in the United States, to improve compensation to tort injury victims or their property and to insure the tortfeasor’s financial wellbeing. Implementing this model will further help to correct a history of insurance discrimination against Black Americans and other minority groups. It will also allow younger generations to become more secure in their financial wellbeing and hopefully accumulate wealth.

Part I of this Note will begin with an introduction to the history of insurance in the United States and Germany and the concepts of personal liability policies.⁷See infra Part I. Additionally, this Part will briefly discuss how damages are compensated in the American common law and German civil law systems.⁸See infra Part I. Part II will explain the importance of implementing German-type standalone personal liability insurance policies in the United States to address the risk of being uninsured and the inaccessibility of current forms of insurance.⁹See infra Part II.

Part III will first examine the issues within the U.S. insurance market. This will include a discussion on the effects of bundling insurance policies together, as well as historical issues, especially insurance redlining—the practice of insurers denying insurance policies to people in areas primarily populated by Black and Brown families—which perpetuated inequalities in insurance coverage today.¹⁰See infra Part III. Part IV will explore the current options for insuring everyday risk and will discuss why these are insufficient and inaccessible to many people.¹¹See infra Part IV. Part V will then show why the German systems offer a solution to the problems addressed in Part III.¹²See infra Parts III, V. Part V will also address how the implementation of this type of policy could be accomplished in the United States.¹³See infra Part V(A).

I. Background

A. Insurance Fundamentals

Insurance as we know it dates back to legislation enacted in the United Kingdom in 1601 and covered ships and merchandise.¹⁴ Brief History, Ins. Info. Inst., https://perma.cc/8KZC-QWNP (last visited Apr. 5, 2024). An insurance contract may best be defined as any contract by which one contracting party (the insurer) for a valuable consideration (the premium) given by the other party (the insured) assumes the other party’s fortuitous risk of loss or liability and then distributes the risk or liability among a similarly situated group of parties pursuant to the same distribution plan.¹⁵Eric Mills Holmes & John Alan Appleman, Appleman on Insurance Law & Practice Archive § 1.4 (2d ed. 2011) [hereinafter Appleman on Insurance].

Furthermore, a fortuitous event is one that is unforeseeable because it happens by accident or chance.¹⁶ Fortuitous Event, Black’s Law Dictionary (11th ed. 2019). The goal in having the insurer assume the fortuitous risk of the insured is to make the insured whole again after experiencing a loss.¹⁷Appleman on Insurance, supra note 15, § 1.4. To be able to make the insured whole again, the insurer will usually pay a sum of money to the insured from the pot of premiums collected from all policyholders.¹⁸See Appleman on Insurance, supra note 15, § 1.4. Thus, the more policyholders there are, the lower the premiums and the more money available to cover the payouts to insureds.¹⁹ See, e.g.,  Stuart Speiser et al., 1 American Law of Torts: Spreading the Risk; Effect of Liability Insurance; the “Deep Pockets” Approach § 1:35 rev. ed. [hereinafter American Law of Torts] (discussing that “[s]ociety is better able to bear the loss than individuals,” and explaining this risk spreading through the lens of tort law and liability insurance). This assumption of the risk by the insurer in exchange for payment allows cost and risk spreading.²⁰Laurie Vasichek, Note, Liability Coverage for Damages Because of Property Damage Under the Comprehensive General Liability Policy, 68 Minn. L. Rev. 795, 795–96 (1984). Instead of the costs for the loss falling only onto the tortfeasor in a personal injury event, or on the consumers in a products liability scenario, having more insureds of the same type allows for the costs of one insured to be borne by the payments of premiums from all insured parties.²¹See generally Kenneth S. Abraham, Liability Insurance and Accident Prevention: The Evolution of an Idea, 64 Md. L. Rev. 573, 592–99 (2005) [hereinafter Liability Insurance and Accident Prevention] (discussing the development of liability insurance, beginning with commercial liability and workers’ compensation, and then moving on to motorist’s insurance).

B. The History of Private Liability Insurance in the United States

Liability insurance is most familiar in the context of insuring business organizations, especially those engaged in the manufacturing of products.²²See, e.g., Vasichek, supra note 20, at 795. In the United States, private liability insurance only came about after the market for commercial liability insurance had developed.²³Kenneth S. Abraham, The Liability Century: Insurance and Tort Law from the Progressive Era to 9/11 174 (2008) [hereinafter The Liability Century].

Up until the years preceding World War II, hazard-specific policies were the norm for commercial and private consumers, particularly in the realms of product liability and workers compensation.²⁴ Id. at 173. See generally Liability Insurance and Accident Prevention, supra note 21, at 575 (noting that insuring against liability was at first seen as a bad practice because of the fear that it would discourage the insured to be cautious and careful). The Liability Century, supra note 23, at 174. However, the insurance landscape began to change with the development of the Comprehensive General Liability (“CGL”) policy for commercial consumers. This new CGL policy lessened the need for hazard-specific policies,²⁵The Liability Century, supra note 23, at 174. such as fire insurance, which only insure specific occurrences that cause damages to specified places or things, e.g. a fire burning down the insured’s house.²⁶ See generally The Liability Century, supra note 23, at 176 (explaining that policyholders used to be able to purchase individual policies for individual hazards). In contrast, CGL policies offered generalized coverage in two ways: first, they “covered liability for bodily injury and property damage regardless of the hazard out of which liability [arose];”²⁷The Liability Century, supra note 23, at 174. and second, this “[c]overage did not depend on the particular legal doctrine or cause of action that was the basis for the imposition of liability on the policyholder.”²⁸The Liability Century, supra note 23, at 174. These general policies became incredibly popular with commercial consumers because they shielded their wealth from newly expanded liability law.²⁹See The Liability Century, supra note 23, at 176. “[T]ort liability came first, and insurance against these forms of liability followed thereafter.”³⁰The Liability Century, supra note 23, at 173. Although a similar situation occurred with private general liability insurance, these private policies were far less popular at their introduction.³¹See The Liability Century, supra note 23, at 175.

While CGL policies were being offered to commercial consumers, the policies being offered to private parties were different in the scope of their generality.³²See The Liability Century, supra note 23, at 174. The private consumer policies were general as to the legal theory or cause of action on which the liability was based but were specific to the hazard or location.³³The Liability Century, supra note 23, at 175 (indicating that an example of these types of policies were specific as to the policyholder’s residence and would therefore insure against liability for damage caused to others on the premises). At the same time, private consumers were also able to purchase hazard-specific policies.³⁴The Liability Century, supra note 23, at 175. Hazard-specific policies only insure specific risk; for example, sports insurance would insure the risk of damage caused by hitting a baseball or golf ball through someone’s window.³⁵The Liability Century, supra note 23, at 175. With hazard-specific policies, often only those parties who believe that they will be at the most risk for a certain liability will purchase insurance to cover this possible liability.³⁶See The Liability Century, supra note 23, at 173. Ultimately, these individuals chose only to purchase the policies they deemed necessary.³⁷See The Liability Century, supra note 23, at 173. General policies, however, are most effective if a large number of parties purchase insurance for risks that may seldomly come to fruition.³⁸See The Liability Century, supra note 23, at 173.>

To address this adverse selection and multitude of hazard-specific policies, the Comprehensive Personal Liability (“CPL”) policy was developed.³⁹The Liability Century, supra note 23, at 176. The initial uptake of these policies was very low as a result of multiple circumstances, such as World War II, the lack of demand, and societal priorities.⁴⁰The Liability Century, supra note 23, at 176. This only began to change in 1949, when insurers in New York lifted restrictions on multiline policies and were now able to bundle different policies together.⁴¹The Liability Century, supra note 23, at 177. Insurers leapt at the opportunity to combine the overlooked CPL policy with property insurance policies.⁴²See The Liability Century, supra note 23, at 177. This proved to be a winning move: as the housing market took off after the war, many sought to purchase homes using mortgages through the Veterans Administration, the Federal Housing Administration (“FHA”), and local savings and loan companies, all of which required potential mortgagors to have property insurance.⁴³The Liability Century, supra note 23, at 177. This meant that while homeowners were purchasing property insurance, they were simultaneously purchasing personal liability insurance.⁴⁴See The Liability Century, supra note 23, at 177 (“In 1950 there were 17 million mortgaged residences; by 1959 there were 46 million.”). Moreover, this was a win-win for the insurers and the mortgagors, as the liability insurance protected the financial capacity of the homeowner to pay the mortgage payments, while also putting more money in the pool for insurance payouts.⁴⁵See The Liability Century, supra note 23, at 177.

C. The German Liability Concept

Meanwhile, in Germany, compensation for damages took a slightly different course.⁴⁶See generally Ulrich Magnus, Compensation for Personal Injuries in a Comparative Perspective, 39 Washburn L.J. 347, 347 (2000). There, compensation for injury is managed by four instruments all working together: tort law liability, statutory strict liability, public insurance, and private insurance.⁴⁷ Id. at 352. Under tort liability law in the United States, compensation for certain injuries is determined by the court system, while in Germany, there are statutory caps to the amounts that can be recovered.⁴⁸ Id. at 352, 355. The second instrument includes several German statutes that create strict liability for employers as well as manufacturers in certain situations, which also limit the amount of compensation.⁴⁹ Id. at 354, 355. The third component includes mandatory social insurances: medical, retirement, and accident insurance.⁵⁰ Id. at 355. Lastly, private insurance, including auto and personal liability, covers the gaps left by the other three legs.⁵¹ See Id. at 358. Auto insurance is mandatory, while other policies—including the private liability insurance policies—are highly encouraged.⁵² See § 1 Gesetz über die Pflichtversicherung für Kraftfahrzeughalter (Pflichtversicherungsgesetz) [Law on Compulsory Insurance for Motor Vehicle Owners (Compulsory Insurance Law)] v. 5.4.1965, BGBI. I 1965 p. 213; Magnus, supra note 46, at 358. Under this scheme, the duty to recover costs through lawsuits moves to the insurer; and because a large part of the population is insured, the result is that insurers battle against other insurers instead of private individuals.⁵³ See generally Magnus, supra note 46, at 347.

In Germany, liability based on a statutory scheme also began (like in the U.S.) by trying to insure employers to fully compensate workers who suffered injuries on the job.⁵⁴Compare The Liability Century, supra note 23, at 39 (indicating that the first push for liability insurance occurred in the US in the form of workers compensation), with Christian v. Bar, Das “Trennungsprinzip” und die Geschichte des Wandels der Haftpflichtversicherung, Arch. F. Burg. 289 (1981). Because Germany is not a common law country, but rather a civil law system relying on a complex set of codes and regulations, liability had to be codified to become part of the law.⁵⁵Jochen Lehmann, Legal Systems in Germany: Overview, Thomson Reuters, https://perma.cc/G8SG-UK2V (last updated Dec. 1, 2022). This created a more robust and certain liability system, unlike the complex system of common law and chance seen in the U.S..⁵⁶ See, e.g., Jeffrey O’Connell, The Lawsuit Lottery 8 (1979).

As Germany quickly industrialized during the second half of the nineteenth century, the question of workers’ protection became an increasingly large issue.⁵⁷ See Stabilität – von Anfang an: Die Geschichte der Gesetzlichen Unfallversicherung – ein Rückblick (Teil 1), Deutsche Gesetzliche Unfallversicherung, https://perma.cc/6DMX-9FUX (last visited Apr. 7, 2024) [hereinafter Stabilität – von Anfang an] (explaining the origins of the national accident insurance, a similar insurance as U.S. worker’s compensation law) At first the state did not take responsibility for workers’ protections and pushed the duty onto the workers and employers as a private legal matter.⁵⁸ Id. Only in the railroad and mining industries, where deaths and bodily injury were rampant, was there a codified concept of strict liability under the 1871 Reichshaftpflichtgesetz (the German Empire’s law on the duty to compensate).⁵⁹ See id.; Marc Stauch, Approaches to Fault in German Tort Law, 13 Torts L. J. 242, *5 (2005). Unfortunately, even this law did not completely change the way fault worked.⁶⁰See Stabilität – von Anfang an, supra note 57. Even though employers were now legally liable for the harm their workers suffered, the workers had the burden of proof to show that the employer was negligent—something most workers could not afford to do.⁶¹See Stabilität – von Anfang an, supra note 57. Furthermore, this body of law encouraged employers to get accident insurance, or “Unfallversicherung”.⁶²Bar, supra note 54, at 298

This accident insurance compensated workers when they sustained injuries while on the job or on their way to work.⁶³ See Bar, supra note 54, at 297; Überblick zur Unfallversicherung, Bundesministerium für Arbeit und Soziales, https://perma.cc/BXS8-CCEF (last visited Apr. 7, 2024) (indicating that state sponsored accident insurance only covers certain branches of industry and certain groups of people or workers). On the other hand, Haftpflichtversicherung (liability insurance) compensated workers for the torts of their employers.⁶⁴See Bar, supra note 54, at 298. Although the Reichshaftpflichtversicherung (the German Empire’s legal duty to compensate) intended to encourage uptake of accident insurance, the cost was prohibitive and the employers turned to the commercial liability insurers.⁶⁵Bar, supra note 54, at 298 This, however, did not last long.⁶⁶ See Bar, supra note 54, at 298. See generally Born et al., Quellensammlung Zur Geschichte der Deutschen Sozialpolitik 1867 bis 1914 at 1 (1994). In 1884, the formal Unfallversicherungsgesetz (accident insurance law) was enacted, and employers were required to enter into and pay premiums to the state insurance scheme, providing compensation for workers who were injured or killed on the job.⁶⁷ See Born et al., supra note 66, at xxxiii; Bar, supra note 54, at 298. Following Unfallversicherungsgesetz (accident insurance law), employers turned away from liability insurances again, instead of dealing with the question of liability, to the point that insurers offering these policies nearly went out of business.⁶⁸ See Bar, supra note 54, at 298. Because of this, liability insurers sought new markets, and found them in small businesses, property owners, cyclists, car drivers, hunters, doctors, pharmacists, builders and many more.⁶⁹ See Bar, supra note 54, at 301. The extra coverage of property damage in addition to death and bodily injury in 1889 revolutionized liability insurance.⁷⁰Bar, supra note 54, at 301. This was the winning combination, and once offered to the general public as private liability insurance, these policies made up almost half of all insurance policies in Germany.⁷¹Bar, supra note 54, at 301–02 (finding that in 1902, of the 51 million Mark premiums, 23 million Mark (44.6%) were from liability insurances).

The second crucial branch to the statutory liability scheme was §823 of the Bürgerliches Gesetzbuch (“BGB”) (Civil Law Book), which established that a person is liable to another if they unlawfully cause injury to the other’s person, freedom, or property.⁷²§ 823 Abs. 1 S. 1 BGB (establishing legal liability in events of negligent or intentional injury to another and requiring compensation to make the injured party whole). Additionally, this section established the duty to fully compensate the injured party for the harm caused.⁷³ See id. The BGB, however, was not published until 1896 and only entered into effect on January 1, 1900.⁷⁴ Bürgerliches Gesetzbuch (BGB), Bundesamt für Justiz, https://perma.cc/W2Z2-P76F (last visited Apr. 7, 2024); Nicole Sotelo, German Civil Code (Bürgerliches Gesetzbuch, BGB) (1900), Univ. of N.C., https://perma.cc/ZC4B-LSYY (last visited Apr. 7, 2024). This section nevertheless has become the lynchpin for liability insurance because of the statutory liability prescribed to tortious conduct and the requirement for full compensation.⁷⁵Stauch, supra note 59, at *8; see § 823 Abs. 1 S. 1 BGB.

Section 823 follows a similar structure to the common law tort of negligence: duty, breach, harm, and causation.⁷⁶Stauch, supra note 59, at *7–8. Interestingly, section 823 includes an element of possible strict liability, which is not necessarily included in the common law negligence analysis.⁷⁷ Compare § 823 Abs. 1 S. 1 BGB, with Mass. Tort L. Manual (Third) § 1.1.2 (2021) (explaining that when a tortfeasor violates a protective statute, criminal law, ordinance, or other, then this may constitute evidence towards negligence, and would replace the breach and duty elements). Additionally, § 823’s requirement for the tortfeasor to fully compensate the injured party does not find statutory underpinnings in U.S. law.⁷⁸ Compare § 823 Abs. 1 S. 1 BGB, with Peter Huber, Liability: The Legal Revolution and Its Consequences 3–19 (1988). Over the past century, these main discrepancies have led to vastly different systems: the German system requiring liability and thus creating demand for liability insurance, and the American system, where liability is contested and where awards and the chance of winning suits have incentivized litigation.⁷⁹ See Huber, supra note 78.

D. How Injured Parties are Compensated for Damages

When a party is injured because of the tortious negligent conduct of another, their routes to compensation for their damages will largely depend on where in the world this injury occurred.⁸⁰ See generally supra Part I(B)–(C). Because of the widespread uptake of personal liability policies in Germany, compensation will be easier than in the United States, where many defendants are or become judgment-proof.⁸¹ See Stephen G. Gilles, The Judgement-Proof Society, 63 Wash. & Lee L. Rev. 605, 606–07 (2006).

1. From Accident to Compensation: The American Model

In the event that a person causes an accident, injuring another person or their property, there are a few different outcomes and paths to (possible) compensation.⁸²Compare The Liability Century, supra note 23, at 173, with O’Connell, supra note 56, at 9. For the injured party to recover, it must first be determined what kind of entity the possible tortfeasor is: the government, a business, or a private person.⁸³ See O’Connell, supra note 56, at 9. If the government or a government employee caused the injury and the injury can be proven, then compensation is more likely.⁸⁴James L. Huffman, Impact of Government Liability on Private Risk Avoidance in The Economic Consequences of Liability Rules: In Defense of Common Law Liability ch. 4, 63 (Roger E. Meiners & Bruce Yandle eds., 1991) (arguing that because the government has large taxing power, it is in a unique spot to absorb liability as a large self-insurer). Furthermore, where the government is the tortfeasor, the Federal Tort Claims Act demands compensation.⁸⁵ Federal Tort Claims Act, U.S.H.R., https://perma.cc/PDR3-J9EM (last visited Apr. 7, 2024) (indicating that under the Federal Tort Claims Act, the United States is substituted for the tortfeasor-government-official or employee and is liable in the same extent as that individual would be, thus acting as a self-insurer). Commercial enterprises fall into a similar category of strict liability when it comes to injuries to their employees.⁸⁶ See generally Restatement (Second) of Torts § 402A (Am. L. Inst. 1965) (establishing strict liability for sellers of defective products); Exec. Off. of Lab. and Workforce Dev., Workers’ Compensation Insurance Requirements, Mass.Gov, https://perma.cc/XW89-XL5W (last visited Apr. 7, 2024) (requiring employers carry insurance to cover work-place injuries to their employees); Legal Info. Inst., Products Liability, Cornell L. Sch., https://perma.cc/Y7TW-2SYP (last visited Apr. 7, 2024) (defining the strict liability imposed upon the entire chain of manufacturers, distributors, and retailers). Again, it is likely that the injured party will be able to recover for damages caused.⁸⁷ See Workers’ Compensation Insurance Requirements, supra note 86 (indicating that because there is a requirement for employers to be insured, that the damages caused by employers will be compensated).

Lastly, if the tortfeasor is a private individual, the prospects of recovery become slightly more difficult.⁸⁸ See O’Connell, supra note 56, at 8. In The Lawsuit Lottery, Jeffrey O’Connell describes the payment prospect as being largely governed by chance: (1) whether the fault of the tortfeasor’s conduct can be proven; (2) whether the tortfeasor’s assets or insurance limits are high enough to be able to compensate the loss or expenses caused; (3) whether the injured party can prove their innocence; and (4) whether the injured party can retain an attorney who can play the system and convince the jury of the pain and suffering that the injured party experienced.⁸⁹O’Connell, supra note 56, at 8. Because of this gamble, of those “injured in traffic accidents, 55 percent get absolutely nothing from the tort liability system.”⁹⁰O’Connell, supra note 56, at 8. Thus, where a driver in a traffic accident does not carry insurance, or carries the minimum insurance, the injured party may be looking at a large out-of-pocket cost for medical bills, and an unreclaimable amount of lost wages, pain, and suffering.⁹¹ See Facts + Statistics: Uninsured Motorists, Ins. Info. Inst., https://perma.cc/ESR2-AGT6 (last visited Apr. 7, 2024) [hereinafter Uninsured Motorists] (reporting that the largest estimated number of uninsured motorists are in Mississippi at 29.4%, whereas Massachusetts has the second lowest amount at 3.5%). On the other hand, the insurance may step in to cover the costs for damages if the driver is insured, has a high enough coverage, is proven to be at fault, and the injured party is proven to be innocent.⁹² See O’Connell, supra note 56, at 158 (explaining that under a no-fault insurance system—which has been enacted in twenty-four states, including Massachusetts—auto insurers will cover all costs not covered under medical insurance).

If the injury occurs on the property of a homeowner, then this compensation can look different yet again.⁹³ See, e.g., Rowland v. Christian, 443 P.2d 561, 568 (Cal. 1968) (holding that the categories of invitee, licensee, and trespasser should not determine the duty of care that the property owner should exercise, thus making property owners liable for injuries resulting from a lack of care). As established above, many if not most property owners—at least in the 1950s—were required to have some sort of property insurance which included a personal liability policy.⁹⁴The Liability Century, supra note 23, at 177. However, this usually did not include Black families and other minorities, who often did not qualify for loans and mortgages from the FHA because of redlining policies.⁹⁵ See generally Richard Rothstein, The Color of Law (2017) (exploring the effects of redlining, the practice of drawing a red line around neighborhoods where predominantly Black and brown families lived, and denying loans to these families on the grounds that the areas were less secure). This meant that damages caused by a negligent property owner would likely be compensated by the insurer if the property owner is insured with property and personal liability insurance.⁹⁶See The Liability Century, supra note 23, at 177.  Sadly, if the homeowner is not insured, then the compensation could be ruinous to the homeowner, and the injured party may still not be adequately compensated for their pain and suffering.⁹⁷See The Liability Century, supra note 23, at 177.

2. From Accident to Compensation: The German Model

Based on the four-part scheme mentioned above, there are some similarities and many differences between the German and American models.⁹⁸See The Liability Century, supra note 23, at 177; Magnus, supra note 46, at 347, 352. Given the legal requirement that wrongdoers fully compensate the injured party, the system is set up in a way to ensure that the injured party is fully compensated regardless of whether the wrongdoer is capable of paying.⁹⁹ Cf. § 823 Abs. 1 S. 1 BGB; Magnus, supra note 46, at 347, 352.

Under the German structure, as in the U.S., the first determination that must be made is the type of tortfeasor.¹⁰⁰ See Magnus, supra note 46, at 353 (suggesting that the statutory landscape of Germany puts liability onto various tortfeasors in a no-fault liability structure). Like in the U.S. system, where there is a government or commercial entity, there are statutory strict liability laws which demand compensation in the event of injury supported by causation.¹⁰¹ See e.g., § 1 Gesetz Über die Haftung für Fehlerhafte Produkte (Produkthaftungsgesetz) v. 17.7.2017, BGBI. I 2421 (demanding compensation in a strict liability fashion for products manufacturers, distributors, or retailers where the product has caused bodily injury or property damage). Furthermore, as with the American model, the situation changes somewhat if the injury causing party is a private individual.¹⁰² See Magnus, supra note 46, at 347. When a private individual causes injury to another’s person or property, two types of insurance are common in Germany.¹⁰³ See Magnus, supra note 46, at 352, 355–58. First in line are the social insurances like medical and accident insurances.¹⁰⁴ See Magnus, supra note 46, at 352. The damaged party will likely have their medical costs covered by their own social insurances, which are mandatory.¹⁰⁵Magnus, supra note 46, at 355–56. After this, the only remaining damages are pain and suffering and possibly property damage.¹⁰⁶ See Magnus, supra note 46, at 353, 355, 357. This is where the private liability insurance steps in and pays the damaged party for the property damage or other uncovered costs.¹⁰⁷Magnus, supra note 46, at 358. In sum, there is almost no scenario in which the injured party is not compensated—either immediately or over a period of time.¹⁰⁸ Compare Magnus, supra note 46, at 347, with § 823 Abs. 1 S. 1 BGB (indicating that because it is illegal not to compensate the injured party, the tortfeasor will compensate the injured party one way or another).

II. Importance of the Issue

Liability can be a complex and murky concept with conflicting definitions and an ever evolving set of statutes that are intertwined with common law principles.¹⁰⁹ See, e.g., The Economic Consequences of Liability Rules: In Defense of Common Law Liability 3–4 (Roger E. Meiners & Bruce Yandle eds., 1991) [hereinafter The Economic Consequences]; O’Connell, supra note 56, at 9 (arguing that tort claims can have a disparate outcome for plaintiffs and defendants, while attorneys and doctors are the only ones who really profit off of personal injury suits); Huffman, supra note 84, at 63. At its core, liability is “the quality, state, or condition of being legally obligated or accountable; legal responsibility to another or to society, enforceable by civil remedy.”¹¹⁰ Liability, Black’s Law Dictionary (11th ed. 2019). Liability can be predetermined by statute, as with strict liability statutes.¹¹¹ See The Economic Consequences, supra note 109, at 4 (explaining how liability has changed due to legislative action). Courts have enforced strict liability for certain tortious acts, such as: defaults in products from manufacturers, workplace injuries due to employer negligence, and negligent upkeep of train tracks.¹¹²See Products Liability, supra note 86. When statutes prescribe liability for certain damages in advance of the transaction taking place, future parties will act differently than if liability is to be determined on a case-by-case basis.¹¹³ See The Economic Consequences, supra note 109, at 4. Use of personal liability insurance would therefore simplify the complex liability landscape by ensuring that a damaged party is compensated, and the injuring party is not financially devastated.¹¹⁴See The Liability Century, supra note 23, at 178.

Conversely, because of how private liability in the United States is bundled with homeowners or renters insurance policies, which are not necessarily required to be purchased, there are still large gaps in the landscape of liability.¹¹⁵ See, e.g., Homeownership Rate in the United States from 1990 to 2022, Statista (Feb. 6, 2023), https://perma.cc/QY43-RZLU [hereinafter Homeownership Rate in the United States] (showing that home ownership is currently at 65.9%); Nathan Paulus, Homeowner Insurance Statistics, Moneygeek, https://perma.cc/CEA3-MPWY (last updated Jan. 31, 2023) (finding that 93% of homeowners have some form of insurance). This is more apparent now that younger generations cannot currently afford to buy houses that have mortgages requiring the purchase of property insurance.¹¹⁶ See Alexander Hermann, Price-to-Income Ratios Are Nearing Historic Highs, J. Ctr. for Hous. Stud. of Harvard Univ. (Sept. 13, 2018) https://perma.cc/5BXD-84P8 (indicating that the historic height of housing prices along with stagnant income levels has caused concern regarding housing affordability). Furthermore, this has not taken into account the systemic issues which have likely led to certain minority groups, especially Black and Hispanic Americans, being underinsured in regard to property and liability insurances.¹¹⁷ See Rothstein, supra note 95. Due to these two growing groups of uninsured or underinsured private individuals, the likelihood of damages resulting in financial ruin has increased.¹¹⁸ See Rothstein, supra note 95.

German-style standalone personal liability insurance offered for low costs, with high liability limits, would provide financial security to those who may need it most in America: the young, indebted generations, as well as minority populations who have not been afforded the chance to build wealth.¹¹⁹ See Neil Bhutta et al., Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances, Fed. Rsrv. (Sept. 28, 2020), https://perma.cc/QR6F-QCLS (compiling data from the 2019 survey on consumer finances and finding that white families have the highest levels of wealth, with Black and Hispanic families having less than 15% of that wealth); Bill Fay, Demographics of Debt, Debt, https://perma.cc/F5N8-JVAY (last updated Dec. 4, 2023) (indicating that although certain demographics may have higher debt than other portions of the population, this does not mean that they have the same capability or capacity to pay those debts back).

Analysis

III. The Insurance Market in the United States Perpetuates Inequality and Risk

The history of how personal liability policy came about in the United States—and the effects of early insurance practices—have perpetuated insurance disparities among younger generations, as well as many generations of Black and Latinx people.¹²⁰See generally The Liability Century, supra note 23; Rothstein, supra note 95. To better market personal liability policies, insurers bundled them with homeowners policies, making these plans inaccessible to many.¹²¹See The Liability Century, supra note 23, at 174. Historically, these policies were exclusively available to white homeowners because of practices like redlining.¹²² See John H. Gilmore, Insurance Redlining & the Fair Housing Act: The Lost Opportunity of Mackey v. Nationwide Ins. Co., 34 Cath. U. L. Rev. 563, 566 (1985). Although redlining has since been outlawed, its effects have had dire consequences for today’s generations.¹²³ See id.; Rothstein, supra note 95. Unfortunately, inflation and stagnant wages have further exacerbated these issues.¹²⁴ See Robert Rich et al., More Workers Find Their Wages Falling Even Further Behind Inflation, Fed. Rsrv. Bank of Dall. (Oct. 4, 2022), https://perma.cc/FQ29-CDW2. These issues could be solved by divorcing personal liability policies from homeowners and renters policies and providing high coverage for low premiums.¹²⁵See infra Part V.

A. American Insurance and Legal Practices Set up Personal Liability Policies for Failure

In the United States, the most commonly purchased liability insurance lines for private individuals are homeowners/renters insurance and auto insurance.¹²⁶ See Mathilde Carlier, Total Number of Licensed Drivers in the United States in 2021, by State, Statista (Mar. 14, 2023), https://perma.cc/G4QW-5MZ2; Uninsured Motorists, supra note 91; Quick Facts, U.S. Census Bureau, https://perma.cc/9ARY-U7QH (last visited Apr. 8, 2024) [hereinafter Quick Facts]; Homeownership Rate in the United States, supra note 115 (showing home ownership for 2022); J. Ctr. for Hous. Stud. of Harvard Univ., America’s Rental Housing 2022 1, 3, 43 (2022), https://perma.cc/B29M-7HJF [hereinafter America’s Rental Housing]. As of 2021, there were 232.8 million licensed drivers in the United States.¹²⁷Carlier, supra note 126. Of these, over 80% carried some form of auto insurance.¹²⁸See Uninsured Motorists, supra note 91. Turning to housing, approximately 65.9% of the 143.8 million housing units in the United States are owner occupied.¹²⁹ Homeownership Rate in the United States, supra note 115 (showing home ownership for 2022); Quick Facts, supra note 126 (listing the number of housing units in 2022). 93% of these homeowners have some form of insurance for their property.¹³⁰Paulus, supra note 115. On the other side of things, 34.6% of homes are rented,¹³¹America’s Rental Housing, supra note 126. but only 55% of renters have a renter’s insurance policy.¹³²Rob Gabriele, 2022 Renter’s Insurance Industry Report, SafeHome (June 11, 2023), https://perma.cc/U5TX-AXCD. This third of the population that rents has either chosen to rent or has been forced into the rental position because of decades of discriminatory practices by insurers and lenders.¹³³ See generally Rothstein, supra note 95. 

1. Insurance Redlining

As in housing and the obtaining of mortgages, redlining was also a prevalent practice in insurance sales.¹³⁴Ins. Bureau Mich. Dep’t. of Com., Essential Insurance in Michigan: An Avoidable Crisis 5–6 (Mar. 14, 1977); see also Ruthanne DeWolfe et al., Civil Rights Implications of Insurance Redlining, 29 DePaul L. Rev. 315, 315 (1980); Gilmore, supra note 122, at 566. Redlining was the practice of using geographic, color-coded maps of cities and towns—green being the safest, most desirable; yellow being areas that were changing; and red being the most undesirable.¹³⁵ See Robert K. Nelson, Mapping Inequality: Redlining in New Deal America, Univ. of Richmond, https://perma.cc/2N3M-Y4N7 (last visited Apr. 7, 2024) (discussing how Home Owners’ Loan Corporation agents created redline maps between 1935 and 1940). Desirability was determined by local appraisers based on the racial and class make-up of the areas.¹³⁶ See DeWolfe et al., supra note 134, at 317–18. In many cases this meant that the Blacker the area, the more likely it would be redlined.¹³⁷ See Nelson, supra note 135 (quoting an influential real estate appraiser, Frederick Babcock, “‘The infiltration of inharmonious racial groups . . . tend to lower the levels of land values and to lessen the desirability of residential areas.’” (citation omitted)). A neighborhood was also downgraded if there were more Asian, Mexican, or other immigrant residents.¹³⁸ See Nelson, supra note 135. Areas with lower class, working white residents were also deemed less desirable.¹³⁹ See Nelson, supra note 135.

Because neighborhoods within the red lines were deemed less desirable, thus lowering the property values, it was believed that the residents in these areas would not be able to pay their mortgages.¹⁴⁰ See Nelson, supra note 135; Rothstein, supra note 95. Further, insurers believed that because of the lower economic class or race of the residents in these areas, these homes were considered too risky to insure.¹⁴¹See generally Rothstein, supra note 95; Nelson, supra note 135. The areas affected were often older urban areas, supposedly in economic decline.¹⁴²DeWolfe et al., supra note 134, at 317. Thus, the lack of access to insurance meant that the most vulnerable members of society had the most risk.¹⁴³Gilmore, supra note 122, at 564 n.2.

To magnify this severe situation, denial of insurance led to the further denial of mortgages.¹⁴⁴Gilmore, supra note 122, at 566. Potential borrowers had to have homeowners insurance in order to qualify for a mortgage.¹⁴⁵Gilmore, supra note 122, at 566. This meant that while families in neighborhoods that were deemed “safe” to invest in and insure were able to protect the wealth that they had invested into their homes, families in economically declining areas lacked the opportunity to protect and accumulate wealth in this way.¹⁴⁶ See generally Rothstein, supra note 95 (explaining that oftentimes families in redlined neighborhoods, who were not able to secure a mortgage, were only offered contract payments, payments more similar to rent, which did not allow for the accumulation of wealth nor the benefiting from rising property values); Gilmore, supra note 122, at 566. The final detrimental act was the bundling of homeowners insurance with private liability insurance.¹⁴⁷Compare Gilmore, supra note 122, at 566 (indicating that those in redlined areas would not qualify for homeowners insurance), with The Liability Century, supra note 23, at 177 (finding that because the CPL policies were not selling, there was a need to bundle these with homeowners insurance in order to get a wider uptake). Only offering private liability policies with homeowners policies meant that those who did not qualify for or were denied homeowners insurance had no access to private liability insurance.¹⁴⁸See Rothstein, supra note 95. In other words, because private liability policies protect the insured’s wealth in the event of liability for damages, those without homeowners insurance and without private liability insurance could lose their house and their wealth.¹⁴⁹See Rothstein, supra note 95.

2. Enactment of FAIR Plans in the 1960s and 1970s

Although the uptake of homeowners and therefore personal liability policies increased between the 1940s through the 1960s, the issues of insurance discrimination and inaccessibility went largely unaddressed.¹⁵⁰See Joanne Dwyer, Fair Plans: History, Holtzman and the Arson-for-Profit Hazard, 7 Fordham Urb. L.J. 617, 619–20 (1978). The riots that took place in many cities in the mid 1960s became a focal point for insurance discrimination issues.¹⁵¹See id. Insurers pointed to these riots as a reason for not insuring properties in areas where riots were more prevalent.¹⁵² See id. (pointing to city neighborhoods where, because of redlining and other policies, there were denser populations and a lack of public services). Because these areas had already suffered from redlining, a national committee was established to address the denial of coverage in the voluntary insurance market to insurable properties in uninsurable areas.¹⁵³ See id. at 617–18. The results were the Fair Access to Insurance Requirements (“FAIR”) Plans passed under the Urban Property Insurance and Reinsurance Act of 1968, under which certain standards had to be met by participating insurers to receive riot reinsurance (insurance for insurers).¹⁵⁴ Id. at 621–22; All-Indus. Rsch. Advisory Council, Attitudes of FAIR Plan Home Insurance Policyholders in 12 Major American Cities 7 (1981). Currently, thirty-four states and the District of Columbia still have FAIR Plans.¹⁵⁵Elizabeth Rivelli, FAIR Plan Home Insurance, Bankratet, https://perma.cc/D7LV-RHUR (last updated Mar. 14, 2024). Insurers who participated in the newly state-enacted FAIR Plans were no longer allowed to surcharge rates or deny “essential property insurance” to insurance seekers.¹⁵⁶Dwyer, supra note 150, at 623 (explaining that homeowners who did not qualify for insurance from regular insurers could seek coverage through FAIR plans, where insurers would have to provide some minimum form of coverage). These plans had limited impact.¹⁵⁷ See Dwyer, supra note 150, at 631. Because they insured homes in areas that could have experienced riots, the FAIR Plan rates crept up higher than the voluntary market rates.¹⁵⁸ See Dwyer, supra note 150, at 630 (discussing that the voluntary market was comprised of the insurers that usually did not insure homes in riot prone areas). To prevent this, the Holzman Amendments, which were passed in 1978, required the FAIR Plan rates to be pinned to state-licensed insurers who marketed insurance on the voluntary market.¹⁵⁹Dwyer, supra note 150, at 630–31; All-Indus. Rsch. Advisory Council, supra note 154, at 7. Only some of the FAIR Plan states have adopted these amendments.¹⁶⁰ See generally Dwyer, supra note 150, at 630–31.

The insurers in the FAIR Plan market argue that they can only offer basic insurance policies because the FAIR programs are already operating at a net loss.¹⁶¹ See Dwyer, supra note 150, at 630–31. In other words, these “basic property insurance” policies that are offered through FAIR Plans do not necessarily contain any mention of personal liability insurance, because the policies rely on the direct loss of property “from the perils of vandalism and malicious mischief.”¹⁶²Mass. Gen. Laws ch. 175C § 1 (2015) (defining basic property insurance); see Rivelli, supra note 154. Thus, the residents in geographic areas that were likely affected by insurance redlining can only insure their homes with basic policies which do not include personal liability policies.¹⁶³ See generally Rothstein, supra note 95; Gilmore, supra note 122, at 566; Dwyer, supra note 150, at 630–31. The lack of personal liability policies in the FAIR Plan coverage means that those at the most risk are also the least capable of financially weathering those risks.¹⁶⁴ See ch. 175C § 1 (defining basic property insurance only as insuring against direct loss of property as defined in standard fire policies, as well as against direct loss by vandalism and malicious mischief); see, e.g., Vasichek, supra note 20, at 799.

3. Effects of Inflation on Insurance Premiums

In addition to the detrimental effects of insurance policy and practice, inflation has further limited access to personal liability policies.¹⁶⁵ How Does Inflation Affect Insurance Rates?, Liberty Mut. Ins., https://perma.cc/6G78-CEZ4 (last visited Apr. 8, 2024). American “insurance policy limits have significantly lagged behind inflation, with the result that tort damages as determined by the law on the books are increasingly likely to exceed the available . . . insurance.”¹⁶⁶Tom Baker, The Shifting Terrain of Risk and Uncertainty on the Liability Insurance Field, 60 DePaul L. Rev. 521, 532 (2011) (referencing The Liability Century, supra note 23, at 177 (discussing the phenomenon of automobile insurance policy limits)). Meanwhile, insurance rates increase with inflation due to a number of factors, including the increases in the costs of material and labor.¹⁶⁷How Does Inflation Affect Insurance Rates?, supra note 165. Like in the 1980s, when the prices of insurance shot up and inflation was at one if its highest levels,¹⁶⁸Michael Bryan, The Great Inflation: 1965–1982, Fed. Rsrv. Hist. (Nov. 22, 2013), https://perma.cc/Z8KW-8SK7; Stacker, How Auto Insurance Rates Have Changed over the Past Decades, News 19 (May 11, 2022, 12:32 PM CDT), https://perma.cc/3PHK-7VBB (showing how auto insurance rapidly rose during the mid 1970s and have continued to rise since and have risen another seven percent since 2020). today insurance rates are on the rise once again.¹⁶⁹Medora Lee, A Double Whammy for Consumers: Home and Auto Insurance Rates Are Set to Jump in Tandem, USA Today, https://perma.cc/GDC4-ME5R (last updated June 27, 2022, 3:27 PM ET); Trends and Insights: Drivers of Homeowners’ Insurance Rate Increases, Ins. Info. Inst. (Feb. 3, 2022), https://perma.cc/FBK4-4GX3 (finding that homeowners insurance rates have risen “12.2 percent on average nationwide” between 2017 and 2021). This increase of course is not only happening in the United States; Germany is also experiencing price increases for auto and homeowners insurance policies.¹⁷⁰Auto- und Hausbesitzer Betroffen: Höhere Versicherungsbeiträge Voraus, Tagesschau (Nov. 2, 2022, 2:45 PM), https://perma.cc/9FY9-6L5P (reporting that home and car owners should prepare themselves for their insurance rates to increase because the insurers need to keep ahead of and on top of inflation). This increase also comes at a time when wages are stagnant—meaning insurance is becoming unaffordable for minimum wage workers.¹⁷¹ See Rich et al., supra note 124 (finding that more than half of workers are experiencing their wages decline compared to inflation).

4. Results of Bundling Policies Together: Homeowners Insurance and Private Liability Coverage

Because U.S. insurers did not get wide uptake of the newly created CPL policies, insurers began to push for bundling the CPL policies with the homeowners policy.¹⁷² See The Liability Century, supra note 23, at 176–77 (discussing that insurers first got New York statutes overturned to allow for multiline underwriting in 1949). Although this change seemed like the best solution at the time, it meant that the personal liability policy was sidelined and blended into the homeowners insurance.¹⁷³ See The Liability Century, supra note 23, at 177. Currently, this change means that it is difficult to find a standalone personal liability policy for purchase.¹⁷⁴ Compare What Is Standalone Insurance?, Progressive, https://perma.cc/RMV4-QM7X (last visited Apr. 9, 2024) (offering stand alone umbrella policies, which only provide excess coverage to an already existing homeowners and CPL policy), with What Is Individual Liability Insurance and What Does It Cover?, State Farm (Oct. 10, 2022), https://perma.cc/9DK5-Z6TT (explaining that a standalone CPL policies can be purchased by individuals who do not own homes, however State Farm does not sell insurance on the Massachusetts market, making CPL from a large insurer unavailable in Massachusetts). When offered, however, the policy limits often have a maximum limit of $1 million.¹⁷⁵ E.g., Comprehensive Personal Liability, Shelly, Middlebrooks, & O’Leary, Inc., https://perma.cc/KR87-CV4Y (last visited Apr. 8, 2024) (listing the maximum in CPL coverage at $1 million). Meanwhile, personal liability coverage under a homeowners policy usually spans between $100,000 and $500,000 in damages.¹⁷⁶Cate Deventer, What Is Personal Liability Insurance, Bankrate, https://perma.cc/R3M5-684X (last updated Mar. 14, 2024). In comparison, German standalone personal liability policy limits begin at €10 million, and many offer maximum limits of €50 million in damages.¹⁷⁷ Ihr Privathaftpflicht-Vergleich mit Drohnenschutz, , https://perma.cc/Q6PQ-CK22 (last visited Apr. 8, 2024) [hereinafter Ihr Privathaftpflicht-Vergleich] (comparing multiple insurance quotes for a single individual born in 1996, living in Munich Germany, including protection for loss of keys, damage caused by drones, and injuries caused during sports like surfing, skiing, and football).

At the same time, the German policies (depending on coverage) cost between €34 and €60.¹⁷⁸ Dein Haftpflichtversicherungsangebot, Getsafe, https://perma.cc/RCE5-U6WY (last visited Apr. 9, 2024) (offering coverage of €20 million for €34 annually); Privat-Haftpflichtversicherung, HDI, https://perma.cc/9CZA-BGTT (last visited Apr. 8, 2024) (offering their premium private liability insurance with a coverage limit of €50 million for €50.88 annually).  On the other hand, because of the common bundling of homeowners or renters policies with personal liability policies, persons seeking personal liability insurance in the United States pay an average annual insurance cost of $148 for renters insurance and $1,820 for homeowners insurance.¹⁷⁹arah Schlichter, The Average Home Insurance Cost in the U.S. for January 2024, Nerdwallet, https://perma.cc/V48F-QH33 (last updated Apr. 1, 2024); Sarah Schlichter, The Average Renters Insurance Cost for 2023, Nerdwallet, https://perma.cc/5NYK-696Z (last updated Jan. 2, 2024). Even if the German policy costs are added to renters and homeowners insurance, the American rates are higher than the German rates while providing far less coverage.¹⁸⁰ See Hausratsversicherungs-Vergleich, Check 24, https://perma.cc/9YGL-9AEK (last visited Apr. 8, 2024) (comparing different renters insurance rates, which cost on average €30–€40); Verischerungsvergleich für Ihr Einfamilienhaus, Check 24, https://perma.cc/M645-BZX5 (last visited Apr. 8, 2024) (listing homeowners insurance policies for a house built in 1960 between €607–€1,845 annually).

IV. Insufficiency of Currently Offered Means to Insuring Everyday Risk

The low limits of American insurance policies, especially in comparison to the German policies, are woefully inadequate to fully compensate injured parties in the event of the insured’s tortious conduct.¹⁸¹ See Jeffrey O’Connell & John Linehan, Neo No-Fault Early Offers: A Workable Compromise Between First and Third-Party Insurance, 41 Gonz. L. Rev. 103, 110 (2005) (arguing that the two opposing forces between compensation and tort liability are the personal injury attorneys arguing for the tort system and the insurance companies arguing that because the juries are awarding high sums,  premiums must also be raised). This is especially true in personal injury cases, where awards can far exceed the personal liability coverage limits—even with excess umbrella policies.¹⁸² See Umbrella Insurance – How It Works & What It Covers, GEICO, https://perma.cc/7QZB-F45Z (last visited Apr. 8, 2024). Moreover, the American system, unlike the German statutory system, does not have any kind of requirement for the full compensation of tort victims.¹⁸³Kenneth S. Abraham & Lance Liebman, Private Insurance, Social Insurance, and Tort Reform: Toward a New Vision of Compensation for Illness and Injury, 93 Colum. L. Rev. 75, 78 (1993). Where the German injured party is entitled by § 823 of the BGB to full compensation of damages,¹⁸⁴ See § 823 Abs. 1 S. 1 BGB. the American injured party is left with the option of hoping that their own insurance limits are enough to cover the injury and hospital bills, that the other party’s insurance can cover the damage, or that a jury awards a fair sum of damages.¹⁸⁵ See generally Jeffrey O’Connell & James Guinivan, An Irrational Combination: The Relative Expansion of Liability Insurance and Contraction of Loss Insurance, 49 Ohio St. L.J. 757 (1988) (discussing the compensation systems and the growth of the tort versus liability compensation system between 1960 and 1984). This uncertainty alone should be reason enough to introduce high-limit standalone personal liability policies.¹⁸⁶ Cf. Gilles, supra note 81, at 606–07 (arguing that an increase in liability insurance would lead to less judgment-proof cases).

Some even argue that the American legal landscape has built-in rules causing many to be “judgment-proof.”¹⁸⁷ Id. (describing the phenomenon of the injured party not being fully compensated, despite having a judgment against the defendant, because of the many shields the defendant can use to escape the judgment). Due to the nature of the American system of tort liability and liability insurance, “tort liability created demand for liability insurance, and the active way that insurance and insurers operated generated tort liability, thereby expanding liability insurers’ exposure to ever-greater liability.”¹⁸⁸Kenneth S. Abraham & G. Edward White, Rethinking the Development of Modern Tort Liability, 101 B.U. L. Rev. 1289, 1294 (2021). This rise in exposure to greater liability allowed insurers to charge higher premiums.¹⁸⁹ Id. Although liability insurers may offer fair payouts, often the brunt of the coverage for injury is carried by the first-party insurers that compensate the insured for damage suffered directly, health insurance being the most prominent.¹⁹⁰ See O’Connell & Guinivan, supra note 185, at 761.

The main issue with this is many Americans still do not carry enough health insurance, if any, to cover the fees that may flow from damage to their person.¹⁹¹ See generally Abraham & Liebman, supra note 183, at 80 (finding that “more than thirty million Americans have no private or socially provided health insurance, and about one-quarter of those who are covered by health insurance of some sort have inadequate coverage”); Katherine Keisler-Starkey & Lisa N. Bunch, Health Insurance Coverage in the United States: 2021, U.S. Census Bureau, https://perma.cc/GTF8-GZ9T (last updated Sept. 15, 2022) (finding that in 2021, 27.2 million Americans did not have health insurance). Meanwhile, medical fees can range from a few thousand dollars to fifty thousand dollars for certain injuries.¹⁹²Cora Peterson et al., Average Medical Cost of Fatal and Non-Fatal Injuries by Type in the USA, Nat’l Libr. of Med. (Dec. 30, 2019), https://perma.cc/4LK3-JVRK. Combined, this means that if the tortfeasor does not carry liability insurance, and if the injured party does not have health insurance, the injured party’s medical costs alone could cost the defendant close to a year’s salary.¹⁹³ See Emily A. Shrider et al., Income and Poverty in the United States: 2020, U.S. Census Bureau 3 (Sept. 2021), https://perma.cc/Z76J-NAE6 (showing that the median income was $40,464 for nonfamily households, and $86,372 for family households).

The liability scheme familiar to the United States, “[s]upposedly . . . serves the twin objectives of deterring wrongdoing and doing justice.”¹⁹⁴Gilles, supra note 81, at 605. By demanding out of pocket payment from many tortfeasors, especially for intentional torts not usually covered by liability insurance, the system tries to deter the tortious conduct.¹⁹⁵Gilles, supra note 81, at 605. However, this rarely accomplishes the goal because many Americans are “judgment-proof,” or in other words, lack the necessary funds to fully compensate the victims for the torts they may commit.¹⁹⁶Gilles, supra note 81, at 606. As an additional bar to recovery, many smaller injuries will not be litigated because they are not worth the cost of hiring an attorney.¹⁹⁷Gilles, supra note 81, at 606, 608. These small claims make up a large amount of tort actions, ranging by some estimates, in the millions of dollars.¹⁹⁸Gilles, supra note 81, at 608–09 (finding that millions of claims under $5,000, although sometimes for significant harm or injury, will not be litigated because they are not worth litigating for attorneys under contingency fee agreements). Taken together, the unenforceability of judgments and the inability to litigate small claims has possibly accomplished the opposite of deterrence and produced moral hazard—as predicted with tort liability.¹⁹⁹ See Gilles, supra note 81, at 609; Abraham & White, supra note 188, at 1314 (defining moral hazard as “the tendency, other things being equal, of insured parties to exercise less care to protect the insured subject matter than would be exercised if the subject matter were not insured”) Defendants may be incentivized to be less careful because they know that if they cause low amounts of damage, a tort claim will not be litigated, and if they cause larger amounts of damage, American common law makes them near “judgment-proof.”²⁰⁰ See Gilles, supra note 81, at 609.

V. The United States Needs to Offer Standalone Personal Liability Policies Like Germany to Increase Young and Underserved Americans’ Access to Adequate Insurance

As demonstrated, the German and American systems of compensation and liability are quite different but draw their insurance policies from similar starting situations.²⁰¹ See generally The Liability Century, supra note 23, at 177;  Bar, supra note 54, at 301–02. They both began introducing liability policies to address the high rates of injury to workers in hazardous work environments.²⁰² See generally The Liability Century, supra note 23, at 177 (explaining that the first commercial liability insurance was in the realm of worker’s compensation for the torts of their employers); Bar, supra note 54, at 301–02 (indicating that the first liability policy, the Reichshaftphlichtgesetz, only covered the railroad and mining industries). Both systems continued to primarily allow for compensation when fault could be proven.²⁰³ See The Liability Centuryy, supra note 23, at 177; Bar, supra note 54, at 301–02. The two systems then took different turns: Germany pursued a kind of no-fault liability with strict compensation under section 328 BGB as well as other social insurance²⁰⁴ See Bar, supra note 54, at 301–02. and the United States developed and compiled tort liability.²⁰⁵ See generally Gerhard Wagner, Tort, Social Security, and No-Fault Schemes: Lessons From Real-World Experiments, 23 Duke J. Compar. & Int’l L. 3 (2012) (discussing the different choices that societies have in which type of compensatory system they wish to participate in, whether tort liability, first-party, no-fault, or third-party liability schemes). Now, decades later, compensation is not always guaranteed in the U.S. in cases of small tort claims or even large tort claims, while Germans are required to compensate the victim fully and thus are insured with high limits to cover this compensation.²⁰⁶ Compare Gilles, supra note 81, at 605, with Stauch, supra note 59. The uncertainty in the U.S. regarding tort claim compensation could easily be solved by offering standalone personal liability policies.²⁰⁷ Compare Gilles, supra note 81, at 606, with Stauch, supra note 59. Introducing these policies, as they are in Germany—at low costs with high limits—would allow young Americans, who do not own homes or who have historically been denied homeowners insurance, to insure their wealth.²⁰⁸ See America’s Rental Housing, supra note 126, at 3; DeWolfe et al., supra note 134, at 317–18.

A. The United States Needs to Separate Personal Liability from Homeowners and Renters Insurance Policies, Raise Policy Limits, and Keep Premiums Low

The United States should aspire to introduce standalone personal liability policies to reduce the eventuality of the plaintiff facing a judgment-proof defendant, to require injured parties to be compensated, and to provide accessible full coverage personal liability insurance.²⁰⁹ Cf. Magnus, supra note 46, at 347. The first step in accomplishing this feat is to separate the Comprehensive Personal Liability (CPL) policy from the homeowners or renters insurance policies.²¹⁰ See The Liability Century, supra note 23, at 177. This would allow for the purchase of CPL policies by individuals who may not qualify for homeowners or renters insurance, have had to purchase FAIR Plan policies, or do not have or wish to buy any form of property insurance.²¹¹ See The Liability Century, supra note 23, at 173. Increasing the accessibility to this form of insurance would not necessarily increase the moral hazard.²¹² See Abraham & White, supra note 188, at 1314 (conceptualizing moral hazard has increased insurance, decreasing care taken by the insured).

Further, in offering a standalone CPL the policy limits must be raised to the point where they will safely cover the possible claim of an injured party, whether that be for a broken laptop, a hospital stay, or the replacement of all the locks on a building.²¹³ Compare Ihr Privathaftpflicht-Vergleich, supra note 177 (offering policies with limits between €10 and €50 million limits), with Deventer, supra note 176 (reporting personal liability coverage limits falling between $100,000 and $500,000). Having such standalone policies would allow countless Americans, both young and old, to be more secure in their own wealth and belongings.²¹⁴ See cf. Palacios, supra note 5. Lastly, premiums as low as the German policies would protect larger amounts of people, further spreading the risk and keeping rates low.²¹⁵ See cf. Am. Law of Torts § 1:35.

Conclusion

Legal insurance practices in the United States, such as bundling homeowners and personal liability policies, insurance redlining, and tort litigation have disproportionately affected Black, Hispanic, and Asian Americans when it comes to ensuring personal financial wellbeing. Moreover, rising property prices, stagnant wages, and rising insurance premiums have become roadblocks for younger generations to obtain homeowners or renters insurance, thus preventing them from having personal liability insurance. To address this inaccessibility and discriminatory impact, the United States must separate homeowners/renters insurance policies from personal liability policies. This would allow those who do not own property or cars to still purchase personal liability to protect themselves from financial ruin. Additionally, the standalone personal liability policies must have high coverage limits to ensure that the insured’s wealth is covered in any and all liability scenarios. This would also ensure that the injured parties in tort actions would be fully compensated for their damages, while the defendants would not be financially ruined. Lastly, the personal liability insurance premiums must stay low. This will allow for the widest possible uptake because most people would likely be able to afford a payment of $5 a month to secure their financial wellbeing. A wide uptake would allow for a large pool of money with the insurers, allowing them to spread risk and offer the high policy limits that are necessary. Implementing these steps would allow Americans to become more secure in their financial wellbeing, while not having to rely on chance to be fully compensated in the case of injury.

• 1
  Samantha Nolan, Boston EMS 2020 Cyclist & Pedestrian Report, City of Bos. 5 (Apr. 2021), https://perma.cc/4YD4-8GAL (reporting 306 bicycle incidents in 2020 in the Boston and adjacent neighborhoods and identifying that in Boston about 50% of collisions resulted from motor vehicles, and about 50% resulted from collisions with pedestrians).
• 2
  See Liability Waiver, Release, Indemnification, and Voluntary Assumption of Risk (the “Release”), BlueBikes (Nov. 2, 2023), https://perma.cc/6S8K-PJLK (indicating that by using BlueBikes’ services, the user assumes all risk and liability).
• 3
  See Cyclists Collide: Massachusetts Bicycle Accident Case Settled for $350,000 by Boston Bike Injury Lawyer, Spada L. Grp., https://perma.cc/LJ4H-FS9C (last visited April 5, 2024).
• 4
  See Does Insurance Cover Bicycle Accidents?, Progressive, https://perma.cc/93BP-SJLY (last visited Apr. 5, 2024) (advising that in some cases a policyholder’s homeowners insurance or renters insurance would cover damages inflicted by the policyholder on a bicycle who inflicts damage on other’s property).
• 5
  Jen Palacios, Best Liability Insurance in Germany [2024 Comparison], Simple Ger., https://perma.cc/8BAW-B6L3 (last updated Mar. 25, 2024) (providing information as to what personal liability insurance in Germany costs, does and does not insure; also indicating that even amongst these newer insurers, the policies can cover damages up to an amount of €50 million).
• 6
  Hedda Nier, Die Versicherungen der Deutschen, Statista (June 28, 2019), https://perma.cc/2YSL-V5FU (showing that 83% of German households have a personal liability insurance).
• 7
  See infra Part I.
• 8
  See infra Part I.
• 9
  See infra Part II.
• 10
  See infra Part III.
• 11
  See infra Part IV.
• 12
  See infra Parts III, V.
• 13
  See infra Part V(A).
• 14
  Brief History, Ins. Info. Inst., https://perma.cc/8KZC-QWNP (last visited Apr. 5, 2024).
• 15
  Eric Mills Holmes & John Alan Appleman, Appleman on Insurance Law & Practice Archive § 1.4 (2d ed. 2011) [hereinafter Appleman on Insurance].
• 16
  Fortuitous Event, Black’s Law Dictionary (11th ed. 2019).
• 17
  Appleman on Insurance, supra note 15, § 1.4.
• 18
  See Appleman on Insurance, supra note 15, § 1.4.
• 19
  See, e.g.,  Stuart Speiser et al., 1 American Law of Torts: Spreading the Risk; Effect of Liability Insurance; the “Deep Pockets” Approach § 1:35 rev. ed. [hereinafter American Law of Torts] (discussing that “[s]ociety is better able to bear the loss than individuals,” and explaining this risk spreading through the lens of tort law and liability insurance).
• 20
  Laurie Vasichek, Note, Liability Coverage for Damages Because of Property Damage Under the Comprehensive General Liability Policy, 68 Minn. L. Rev. 795, 795–96 (1984).
• 21
  See generally Kenneth S. Abraham, Liability Insurance and Accident Prevention: The Evolution of an Idea, 64 Md. L. Rev. 573, 592–99 (2005) [hereinafter Liability Insurance and Accident Prevention] (discussing the development of liability insurance, beginning with commercial liability and workers’ compensation, and then moving on to motorist’s insurance).
• 22
  See, e.g., Vasichek, supra note 20, at 795.
• 23
  Kenneth S. Abraham, The Liability Century: Insurance and Tort Law from the Progressive Era to 9/11 174 (2008) [hereinafter The Liability Century].
• 24
  Id. at 173. See generally Liability Insurance and Accident Prevention, supra note 21, at 575 (noting that insuring against liability was at first seen as a bad practice because of the fear that it would discourage the insured to be cautious and careful). The Liability Century, supra note 23, at 174.
• 25
  The Liability Century, supra note 23, at 174.
• 26
  See generally The Liability Century, supra note 23, at 176 (explaining that policyholders used to be able to purchase individual policies for individual hazards).
• 27
  The Liability Century, supra note 23, at 174.
• 28
  The Liability Century, supra note 23, at 174.
• 29
  See The Liability Century, supra note 23, at 176.
• 30
  The Liability Century, supra note 23, at 173.
• 31
  See The Liability Century, supra note 23, at 175.
• 32
  See The Liability Century, supra note 23, at 174.
• 33
  The Liability Century, supra note 23, at 175 (indicating that an example of these types of policies were specific as to the policyholder’s residence and would therefore insure against liability for damage caused to others on the premises).
• 34
  The Liability Century, supra note 23, at 175.
• 35
  The Liability Century, supra note 23, at 175.
• 36
  See The Liability Century, supra note 23, at 173.
• 37
  See The Liability Century, supra note 23, at 173.
• 38
  See The Liability Century, supra note 23, at 173.
• 39
  The Liability Century, supra note 23, at 176.
• 40
  The Liability Century, supra note 23, at 176.
• 41
  The Liability Century, supra note 23, at 177.
• 42
  See The Liability Century, supra note 23, at 177.
• 43
  The Liability Century, supra note 23, at 177.
• 44
  See The Liability Century, supra note 23, at 177 (“In 1950 there were 17 million mortgaged residences; by 1959 there were 46 million.”).
• 45
  See The Liability Century, supra note 23, at 177.
• 46
  See generally Ulrich Magnus, Compensation for Personal Injuries in a Comparative Perspective, 39 Washburn L.J. 347, 347 (2000).
• 47
  Id. at 352.
• 48
  Id. at 352, 355.
• 49
  Id. at 354, 355.
• 50
  Id. at 355.
• 51
  See Id. at 358.
• 52
  See § 1 Gesetz über die Pflichtversicherung für Kraftfahrzeughalter (Pflichtversicherungsgesetz) [Law on Compulsory Insurance for Motor Vehicle Owners (Compulsory Insurance Law)] v. 5.4.1965, BGBI. I 1965 p. 213; Magnus, supra note 46, at 358.
• 53
  See generally Magnus, supra note 46, at 347.
• 54
  Compare The Liability Century, supra note 23, at 39 (indicating that the first push for liability insurance occurred in the US in the form of workers compensation), with Christian v. Bar, Das “Trennungsprinzip” und die Geschichte des Wandels der Haftpflichtversicherung, Arch. F. Burg. 289 (1981).
• 55
  Jochen Lehmann, Legal Systems in Germany: Overview, Thomson Reuters, https://perma.cc/G8SG-UK2V (last updated Dec. 1, 2022).
• 56
  See, e.g., Jeffrey O’Connell, The Lawsuit Lottery 8 (1979).
• 57
  See Stabilität – von Anfang an: Die Geschichte der Gesetzlichen Unfallversicherung – ein Rückblick (Teil 1), Deutsche Gesetzliche Unfallversicherung, https://perma.cc/6DMX-9FUX (last visited Apr. 7, 2024) [hereinafter Stabilität – von Anfang an] (explaining the origins of the national accident insurance, a similar insurance as U.S. worker’s compensation law)
• 58
  Id.
• 59
  See id.; Marc Stauch, Approaches to Fault in German Tort Law, 13 Torts L. J. 242, *5 (2005).
• 60
  See Stabilität – von Anfang an, supra note 57.
• 61
  See Stabilität – von Anfang an, supra note 57.
• 62
  Bar, supra note 54, at 298
• 63
  See Bar, supra note 54, at 297; Überblick zur Unfallversicherung, Bundesministerium für Arbeit und Soziales, https://perma.cc/BXS8-CCEF (last visited Apr. 7, 2024) (indicating that state sponsored accident insurance only covers certain branches of industry and certain groups of people or workers).
• 64
  See Bar, supra note 54, at 298.
• 65
  Bar, supra note 54, at 298
• 66
  See Bar, supra note 54, at 298. See generally Born et al., Quellensammlung Zur Geschichte der Deutschen Sozialpolitik 1867 bis 1914 at 1 (1994).
• 67
  See Born et al., supra note 66, at xxxiii; Bar, supra note 54, at 298.
• 68
  See Bar, supra note 54, at 298.
• 69
  See Bar, supra note 54, at 301.
• 70
  Bar, supra note 54, at 301.
• 71
  Bar, supra note 54, at 301–02 (finding that in 1902, of the 51 million Mark premiums, 23 million Mark (44.6%) were from liability insurances).
• 72
  § 823 Abs. 1 S. 1 BGB (establishing legal liability in events of negligent or intentional injury to another and requiring compensation to make the injured party whole).
• 73
  See id.
• 74
  Bürgerliches Gesetzbuch (BGB), Bundesamt für Justiz, https://perma.cc/W2Z2-P76F (last visited Apr. 7, 2024); Nicole Sotelo, German Civil Code (Bürgerliches Gesetzbuch, BGB) (1900), Univ. of N.C., https://perma.cc/ZC4B-LSYY (last visited Apr. 7, 2024).
• 75
  Stauch, supra note 59, at *8; see § 823 Abs. 1 S. 1 BGB.
• 76
  Stauch, supra note 59, at *7–8.
• 77
  Compare § 823 Abs. 1 S. 1 BGB, with Mass. Tort L. Manual (Third) § 1.1.2 (2021) (explaining that when a tortfeasor violates a protective statute, criminal law, ordinance, or other, then this may constitute evidence towards negligence, and would replace the breach and duty elements).
• 78
  Compare § 823 Abs. 1 S. 1 BGB, with Peter Huber, Liability: The Legal Revolution and Its Consequences 3–19 (1988).
• 79
  See Huber, supra note 78.
• 80
  See generally supra Part I(B)–(C).
• 81
  See Stephen G. Gilles, The Judgement-Proof Society, 63 Wash. & Lee L. Rev. 605, 606–07 (2006).
• 82
  Compare The Liability Century, supra note 23, at 173, with O’Connell, supra note 56, at 9.
• 83
  See O’Connell, supra note 56, at 9.
• 84
  James L. Huffman, Impact of Government Liability on Private Risk Avoidance in The Economic Consequences of Liability Rules: In Defense of Common Law Liability ch. 4, 63 (Roger E. Meiners & Bruce Yandle eds., 1991) (arguing that because the government has large taxing power, it is in a unique spot to absorb liability as a large self-insurer).
• 85
  Federal Tort Claims Act, U.S.H.R., https://perma.cc/PDR3-J9EM (last visited Apr. 7, 2024) (indicating that under the Federal Tort Claims Act, the United States is substituted for the tortfeasor-government-official or employee and is liable in the same extent as that individual would be, thus acting as a self-insurer).
• 86
  See generally Restatement (Second) of Torts § 402A (Am. L. Inst. 1965) (establishing strict liability for sellers of defective products); Exec. Off. of Lab. and Workforce Dev., Workers’ Compensation Insurance Requirements, Mass.Gov, https://perma.cc/XW89-XL5W (last visited Apr. 7, 2024) (requiring employers carry insurance to cover work-place injuries to their employees); Legal Info. Inst., Products Liability, Cornell L. Sch., https://perma.cc/Y7TW-2SYP (last visited Apr. 7, 2024) (defining the strict liability imposed upon the entire chain of manufacturers, distributors, and retailers).
• 87
  See Workers’ Compensation Insurance Requirements, supra note 86 (indicating that because there is a requirement for employers to be insured, that the damages caused by employers will be compensated).
• 88
  See O’Connell, supra note 56, at 8.
• 89
  O’Connell, supra note 56, at 8.
• 90
  O’Connell, supra note 56, at 8.
• 91
  See Facts + Statistics: Uninsured Motorists, Ins. Info. Inst., https://perma.cc/ESR2-AGT6 (last visited Apr. 7, 2024) [hereinafter Uninsured Motorists] (reporting that the largest estimated number of uninsured motorists are in Mississippi at 29.4%, whereas Massachusetts has the second lowest amount at 3.5%).
• 92
  See O’Connell, supra note 56, at 158 (explaining that under a no-fault insurance system—which has been enacted in twenty-four states, including Massachusetts—auto insurers will cover all costs not covered under medical insurance).
• 93
  See, e.g., Rowland v. Christian, 443 P.2d 561, 568 (Cal. 1968) (holding that the categories of invitee, licensee, and trespasser should not determine the duty of care that the property owner should exercise, thus making property owners liable for injuries resulting from a lack of care).
• 94
  The Liability Century, supra note 23, at 177.
• 95
  See generally Richard Rothstein, The Color of Law (2017) (exploring the effects of redlining, the practice of drawing a red line around neighborhoods where predominantly Black and brown families lived, and denying loans to these families on the grounds that the areas were less secure).
• 96
  See The Liability Century, supra note 23, at 177.
• 97
  See The Liability Century, supra note 23, at 177.
• 98
  See The Liability Century, supra note 23, at 177; Magnus, supra note 46, at 347, 352.
• 99
  Cf. § 823 Abs. 1 S. 1 BGB; Magnus, supra note 46, at 347, 352.
• 100
  See Magnus, supra note 46, at 353 (suggesting that the statutory landscape of Germany puts liability onto various tortfeasors in a no-fault liability structure).
• 101
  See e.g., § 1 Gesetz Über die Haftung für Fehlerhafte Produkte (Produkthaftungsgesetz) v. 17.7.2017, BGBI. I 2421 (demanding compensation in a strict liability fashion for products manufacturers, distributors, or retailers where the product has caused bodily injury or property damage).
• 102
  See Magnus, supra note 46, at 347.
• 103
  See Magnus, supra note 46, at 352, 355–58.
• 104
  See Magnus, supra note 46, at 352.
• 105
  Magnus, supra note 46, at 355–56.
• 106
  See Magnus, supra note 46, at 353, 355, 357.
• 107
  Magnus, supra note 46, at 358.
• 108
  Compare Magnus, supra note 46, at 347, with § 823 Abs. 1 S. 1 BGB (indicating that because it is illegal not to compensate the injured party, the tortfeasor will compensate the injured party one way or another).
• 109
  See, e.g., The Economic Consequences of Liability Rules: In Defense of Common Law Liability 3–4 (Roger E. Meiners & Bruce Yandle eds., 1991) [hereinafter The Economic Consequences]; O’Connell, supra note 56, at 9 (arguing that tort claims can have a disparate outcome for plaintiffs and defendants, while attorneys and doctors are the only ones who really profit off of personal injury suits); Huffman, supra note 84, at 63.
• 110
  Liability, Black’s Law Dictionary (11th ed. 2019).
• 111
  See The Economic Consequences, supra note 109, at 4 (explaining how liability has changed due to legislative action).
• 112
  See Products Liability, supra note 86.
• 113
  See The Economic Consequences, supra note 109, at 4.
• 114
  See The Liability Century, supra note 23, at 178.
• 115
  See, e.g., Homeownership Rate in the United States from 1990 to 2022, Statista (Feb. 6, 2023), https://perma.cc/QY43-RZLU [hereinafter Homeownership Rate in the United States] (showing that home ownership is currently at 65.9%); Nathan Paulus, Homeowner Insurance Statistics, Moneygeek, https://perma.cc/CEA3-MPWY (last updated Jan. 31, 2023) (finding that 93% of homeowners have some form of insurance).
• 116
  See Alexander Hermann, Price-to-Income Ratios Are Nearing Historic Highs, J. Ctr. for Hous. Stud. of Harvard Univ. (Sept. 13, 2018) https://perma.cc/5BXD-84P8 (indicating that the historic height of housing prices along with stagnant income levels has caused concern regarding housing affordability).
• 117
  See Rothstein, supra note 95.
• 118
  See Rothstein, supra note 95.
• 119
  See Neil Bhutta et al., Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances, Fed. Rsrv. (Sept. 28, 2020), https://perma.cc/QR6F-QCLS (compiling data from the 2019 survey on consumer finances and finding that white families have the highest levels of wealth, with Black and Hispanic families having less than 15% of that wealth); Bill Fay, Demographics of Debt, Debt, https://perma.cc/F5N8-JVAY (last updated Dec. 4, 2023) (indicating that although certain demographics may have higher debt than other portions of the population, this does not mean that they have the same capability or capacity to pay those debts back).
• 120
  See generally The Liability Century, supra note 23; Rothstein, supra note 95.
• 121
  See The Liability Century, supra note 23, at 174.
• 122
  See John H. Gilmore, Insurance Redlining & the Fair Housing Act: The Lost Opportunity of Mackey v. Nationwide Ins. Co., 34 Cath. U. L. Rev. 563, 566 (1985).
• 123
  See id.; Rothstein, supra note 95.
• 124
  See Robert Rich et al., More Workers Find Their Wages Falling Even Further Behind Inflation, Fed. Rsrv. Bank of Dall. (Oct. 4, 2022), https://perma.cc/FQ29-CDW2.
• 125
  See infra Part V.
• 126
  See Mathilde Carlier, Total Number of Licensed Drivers in the United States in 2021, by State, Statista (Mar. 14, 2023), https://perma.cc/G4QW-5MZ2; Uninsured Motorists, supra note 91; Quick Facts, U.S. Census Bureau, https://perma.cc/9ARY-U7QH (last visited Apr. 8, 2024) [hereinafter Quick Facts]; Homeownership Rate in the United States, supra note 115 (showing home ownership for 2022); J. Ctr. for Hous. Stud. of Harvard Univ., America’s Rental Housing 2022 1, 3, 43 (2022), https://perma.cc/B29M-7HJF [hereinafter America’s Rental Housing].
• 127
  Carlier, supra note 126.
• 128
  See Uninsured Motorists, supra note 91.
• 129
  Homeownership Rate in the United States, supra note 115 (showing home ownership for 2022); Quick Facts, supra note 126 (listing the number of housing units in 2022).
• 130
  Paulus, supra note 115.
• 131
  America’s Rental Housing, supra note 126.
• 132
  Rob Gabriele, 2022 Renter’s Insurance Industry Report, SafeHome (June 11, 2023), https://perma.cc/U5TX-AXCD.
• 133
  See generally Rothstein, supra note 95.
• 134
  Ins. Bureau Mich. Dep’t. of Com., Essential Insurance in Michigan: An Avoidable Crisis 5–6 (Mar. 14, 1977); see also Ruthanne DeWolfe et al., Civil Rights Implications of Insurance Redlining, 29 DePaul L. Rev. 315, 315 (1980); Gilmore, supra note 122, at 566.
• 135
  See Robert K. Nelson, Mapping Inequality: Redlining in New Deal America, Univ. of Richmond, https://perma.cc/2N3M-Y4N7 (last visited Apr. 7, 2024) (discussing how Home Owners’ Loan Corporation agents created redline maps between 1935 and 1940).
• 136
  See DeWolfe et al., supra note 134, at 317–18.
• 137
  See Nelson, supra note 135 (quoting an influential real estate appraiser, Frederick Babcock, “‘The infiltration of inharmonious racial groups . . . tend to lower the levels of land values and to lessen the desirability of residential areas.’” (citation omitted)).
• 138
  See Nelson, supra note 135.
• 139
  See Nelson, supra note 135.
• 140
  See Nelson, supra note 135; Rothstein, supra note 95.
• 141
  See generally Rothstein, supra note 95; Nelson, supra note 135.
• 142
  DeWolfe et al., supra note 134, at 317.
• 143
  Gilmore, supra note 122, at 564 n.2.
• 144
  Gilmore, supra note 122, at 566.
• 145
  Gilmore, supra note 122, at 566.
• 146
  See generally Rothstein, supra note 95 (explaining that oftentimes families in redlined neighborhoods, who were not able to secure a mortgage, were only offered contract payments, payments more similar to rent, which did not allow for the accumulation of wealth nor the benefiting from rising property values); Gilmore, supra note 122, at 566.
• 147
  Compare Gilmore, supra note 122, at 566 (indicating that those in redlined areas would not qualify for homeowners insurance), with The Liability Century, supra note 23, at 177 (finding that because the CPL policies were not selling, there was a need to bundle these with homeowners insurance in order to get a wider uptake).
• 148
  See Rothstein, supra note 95.
• 149
  See Rothstein, supra note 95.
• 150
  See Joanne Dwyer, Fair Plans: History, Holtzman and the Arson-for-Profit Hazard, 7 Fordham Urb. L.J. 617, 619–20 (1978).
• 151
  See id.
• 152
  See id. (pointing to city neighborhoods where, because of redlining and other policies, there were denser populations and a lack of public services).
• 153
  See id. at 617–18.
• 154
  Id. at 621–22; All-Indus. Rsch. Advisory Council, Attitudes of FAIR Plan Home Insurance Policyholders in 12 Major American Cities 7 (1981).
• 155
  Elizabeth Rivelli, FAIR Plan Home Insurance, Bankratet, https://perma.cc/D7LV-RHUR (last updated Mar. 14, 2024).
• 156
  Dwyer, supra note 150, at 623 (explaining that homeowners who did not qualify for insurance from regular insurers could seek coverage through FAIR plans, where insurers would have to provide some minimum form of coverage).
• 157
  See Dwyer, supra note 150, at 631.
• 158
  See Dwyer, supra note 150, at 630 (discussing that the voluntary market was comprised of the insurers that usually did not insure homes in riot prone areas).
• 159
  Dwyer, supra note 150, at 630–31; All-Indus. Rsch. Advisory Council, supra note 154, at 7.
• 160
  See generally Dwyer, supra note 150, at 630–31.
• 161
  See Dwyer, supra note 150, at 630–31.
• 162
  Mass. Gen. Laws ch. 175C § 1 (2015) (defining basic property insurance); see Rivelli, supra note 154.
• 163
  See generally Rothstein, supra note 95; Gilmore, supra note 122, at 566; Dwyer, supra note 150, at 630–31.
• 164
  See ch. 175C § 1 (defining basic property insurance only as insuring against direct loss of property as defined in standard fire policies, as well as against direct loss by vandalism and malicious mischief); see, e.g., Vasichek, supra note 20, at 799.
• 165
  How Does Inflation Affect Insurance Rates?, Liberty Mut. Ins., https://perma.cc/6G78-CEZ4 (last visited Apr. 8, 2024).
• 166
  Tom Baker, The Shifting Terrain of Risk and Uncertainty on the Liability Insurance Field, 60 DePaul L. Rev. 521, 532 (2011) (referencing The Liability Century, supra note 23, at 177 (discussing the phenomenon of automobile insurance policy limits)).
• 167
  How Does Inflation Affect Insurance Rates?, supra note 165.
• 168
  Michael Bryan, The Great Inflation: 1965–1982, Fed. Rsrv. Hist. (Nov. 22, 2013), https://perma.cc/Z8KW-8SK7; Stacker, How Auto Insurance Rates Have Changed over the Past Decades, News 19 (May 11, 2022, 12:32 PM CDT), https://perma.cc/3PHK-7VBB (showing how auto insurance rapidly rose during the mid 1970s and have continued to rise since and have risen another seven percent since 2020).
• 169
  Medora Lee, A Double Whammy for Consumers: Home and Auto Insurance Rates Are Set to Jump in Tandem, USA Today, https://perma.cc/GDC4-ME5R (last updated June 27, 2022, 3:27 PM ET); Trends and Insights: Drivers of Homeowners’ Insurance Rate Increases, Ins. Info. Inst. (Feb. 3, 2022), https://perma.cc/FBK4-4GX3 (finding that homeowners insurance rates have risen “12.2 percent on average nationwide” between 2017 and 2021).
• 170
  Auto- und Hausbesitzer Betroffen: Höhere Versicherungsbeiträge Voraus, Tagesschau (Nov. 2, 2022, 2:45 PM), https://perma.cc/9FY9-6L5P (reporting that home and car owners should prepare themselves for their insurance rates to increase because the insurers need to keep ahead of and on top of inflation).
• 171
  See Rich et al., supra note 124 (finding that more than half of workers are experiencing their wages decline compared to inflation).
• 172
  See The Liability Century, supra note 23, at 176–77 (discussing that insurers first got New York statutes overturned to allow for multiline underwriting in 1949).
• 173
  See The Liability Century, supra note 23, at 177.
• 174
  Compare What Is Standalone Insurance?, Progressive, https://perma.cc/RMV4-QM7X (last visited Apr. 9, 2024) (offering stand alone umbrella policies, which only provide excess coverage to an already existing homeowners and CPL policy), with What Is Individual Liability Insurance and What Does It Cover?, State Farm (Oct. 10, 2022), https://perma.cc/9DK5-Z6TT (explaining that a standalone CPL policies can be purchased by individuals who do not own homes, however State Farm does not sell insurance on the Massachusetts market, making CPL from a large insurer unavailable in Massachusetts).
• 175
  E.g., Comprehensive Personal Liability, Shelly, Middlebrooks, & O’Leary, Inc., https://perma.cc/KR87-CV4Y (last visited Apr. 8, 2024) (listing the maximum in CPL coverage at $1 million).
• 176
  Cate Deventer, What Is Personal Liability Insurance, Bankrate, https://perma.cc/R3M5-684X (last updated Mar. 14, 2024).
• 177
  Ihr Privathaftpflicht-Vergleich mit Drohnenschutz, , https://perma.cc/Q6PQ-CK22 (last visited Apr. 8, 2024) [hereinafter Ihr Privathaftpflicht-Vergleich] (comparing multiple insurance quotes for a single individual born in 1996, living in Munich Germany, including protection for loss of keys, damage caused by drones, and injuries caused during sports like surfing, skiing, and football).
• 178
  Dein Haftpflichtversicherungsangebot, Getsafe, https://perma.cc/RCE5-U6WY (last visited Apr. 9, 2024) (offering coverage of €20 million for €34 annually); Privat-Haftpflichtversicherung, HDI, https://perma.cc/9CZA-BGTT (last visited Apr. 8, 2024) (offering their premium private liability insurance with a coverage limit of €50 million for €50.88 annually).
• 179
  arah Schlichter, The Average Home Insurance Cost in the U.S. for January 2024, Nerdwallet, https://perma.cc/V48F-QH33 (last updated Apr. 1, 2024); Sarah Schlichter, The Average Renters Insurance Cost for 2023, Nerdwallet, https://perma.cc/5NYK-696Z (last updated Jan. 2, 2024).
• 180
  See Hausratsversicherungs-Vergleich, Check 24, https://perma.cc/9YGL-9AEK (last visited Apr. 8, 2024) (comparing different renters insurance rates, which cost on average €30–€40); Verischerungsvergleich für Ihr Einfamilienhaus, Check 24, https://perma.cc/M645-BZX5 (last visited Apr. 8, 2024) (listing homeowners insurance policies for a house built in 1960 between €607–€1,845 annually).
• 181
  See Jeffrey O’Connell & John Linehan, Neo No-Fault Early Offers: A Workable Compromise Between First and Third-Party Insurance, 41 Gonz. L. Rev. 103, 110 (2005) (arguing that the two opposing forces between compensation and tort liability are the personal injury attorneys arguing for the tort system and the insurance companies arguing that because the juries are awarding high sums,  premiums must also be raised).
• 182
  See Umbrella Insurance – How It Works & What It Covers, GEICO, https://perma.cc/7QZB-F45Z (last visited Apr. 8, 2024).
• 183
  Kenneth S. Abraham & Lance Liebman, Private Insurance, Social Insurance, and Tort Reform: Toward a New Vision of Compensation for Illness and Injury, 93 Colum. L. Rev. 75, 78 (1993).
• 184
  See § 823 Abs. 1 S. 1 BGB.
• 185
  See generally Jeffrey O’Connell & James Guinivan, An Irrational Combination: The Relative Expansion of Liability Insurance and Contraction of Loss Insurance, 49 Ohio St. L.J. 757 (1988) (discussing the compensation systems and the growth of the tort versus liability compensation system between 1960 and 1984).
• 186
  Cf. Gilles, supra note 81, at 606–07 (arguing that an increase in liability insurance would lead to less judgment-proof cases).
• 187
  Id. (describing the phenomenon of the injured party not being fully compensated, despite having a judgment against the defendant, because of the many shields the defendant can use to escape the judgment).
• 188
  Kenneth S. Abraham & G. Edward White, Rethinking the Development of Modern Tort Liability, 101 B.U. L. Rev. 1289, 1294 (2021).
• 189
  Id.
• 190
  See O’Connell & Guinivan, supra note 185, at 761.
• 191
  See generally Abraham & Liebman, supra note 183, at 80 (finding that “more than thirty million Americans have no private or socially provided health insurance, and about one-quarter of those who are covered by health insurance of some sort have inadequate coverage”); Katherine Keisler-Starkey & Lisa N. Bunch, Health Insurance Coverage in the United States: 2021, U.S. Census Bureau, https://perma.cc/GTF8-GZ9T (last updated Sept. 15, 2022) (finding that in 2021, 27.2 million Americans did not have health insurance).
• 192
  Cora Peterson et al., Average Medical Cost of Fatal and Non-Fatal Injuries by Type in the USA, Nat’l Libr. of Med. (Dec. 30, 2019), https://perma.cc/4LK3-JVRK.
• 193
  See Emily A. Shrider et al., Income and Poverty in the United States: 2020, U.S. Census Bureau 3 (Sept. 2021), https://perma.cc/Z76J-NAE6 (showing that the median income was $40,464 for nonfamily households, and $86,372 for family households).
• 194
  Gilles, supra note 81, at 605.
• 195
  Gilles, supra note 81, at 605.
• 196
  Gilles, supra note 81, at 606.
• 197
  Gilles, supra note 81, at 606, 608.
• 198
  Gilles, supra note 81, at 608–09 (finding that millions of claims under $5,000, although sometimes for significant harm or injury, will not be litigated because they are not worth litigating for attorneys under contingency fee agreements).
• 199
  See Gilles, supra note 81, at 609; Abraham & White, supra note 188, at 1314 (defining moral hazard as “the tendency, other things being equal, of insured parties to exercise less care to protect the insured subject matter than would be exercised if the subject matter were not insured”)
• 200
  See Gilles, supra note 81, at 609.
• 201
  See generally The Liability Century, supra note 23, at 177;  Bar, supra note 54, at 301–02.
• 202
  See generally The Liability Century, supra note 23, at 177 (explaining that the first commercial liability insurance was in the realm of worker’s compensation for the torts of their employers); Bar, supra note 54, at 301–02 (indicating that the first liability policy, the Reichshaftphlichtgesetz, only covered the railroad and mining industries).
• 203
  See The Liability Centuryy, supra note 23, at 177; Bar, supra note 54, at 301–02.
• 204
  See Bar, supra note 54, at 301–02.
• 205
  See generally Gerhard Wagner, Tort, Social Security, and No-Fault Schemes: Lessons From Real-World Experiments, 23 Duke J. Compar. & Int’l L. 3 (2012) (discussing the different choices that societies have in which type of compensatory system they wish to participate in, whether tort liability, first-party, no-fault, or third-party liability schemes).
• 206
  Compare Gilles, supra note 81, at 605, with Stauch, supra note 59.
• 207
  Compare Gilles, supra note 81, at 606, with Stauch, supra note 59.
• 208
  See America’s Rental Housing, supra note 126, at 3; DeWolfe et al., supra note 134, at 317–18.
• 209
  Cf. Magnus, supra note 46, at 347.
• 210
  See The Liability Century, supra note 23, at 177.
• 211
  See The Liability Century, supra note 23, at 173.
• 212
  See Abraham & White, supra note 188, at 1314 (conceptualizing moral hazard has increased insurance, decreasing care taken by the insured).
• 213
  Compare Ihr Privathaftpflicht-Vergleich, supra note 177 (offering policies with limits between €10 and €50 million limits), with Deventer, supra note 176 (reporting personal liability coverage limits falling between $100,000 and $500,000).
• 214
  See cf. Palacios, supra note 5.
• 215
  See cf. Am. Law of Torts § 1:35.