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Legal, Social and Economic Aspects of Liability Insurance

Zvonimir Matić orcid id ; Attorney at Law, Zagreb, Croatia

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In modern economic systems, there is an increasing number of activities that represent a latent source of increased risk of harm to persons and property. Certainty of damage grows proportionally to the development of the economy and the society as a whole: this is why it should no longer be asked whether damage might occur, but rather how to allocate the burden of the payment of damages in the most socially acceptable manner. From a social point of view, it is crucial to allow the injured person certain and prompt compensation for the damage, especially to those who are unable to provide for themselves through employment. From an economic point of view, it is necessary to find a solution for those who bear the cost of the payment of damages in a way that such cost has a less severe effect on their further functioning and development. From a legal point of view, the general principles of law require that the liable party must pay for the damage caused and that the injured party should be brought to the state preceding the harmful event. Current experience shows that liability insurance is a quality instrument for transferring the risk of disbursement from the liable party to an insurer who has the financial and organizational ability to ensure the payment of damages to the injured party. Such transfer of risk is a socially acceptable solution as it primarily protects the interests of injured persons but also of the insured person who, by transferring the burden of payment, is placed in a more favourable position to create new financial values, which also has a positive social and economic effect on the society as a whole.


liability insurance, historical development, insurance functions, tort law, moral hazard

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