Intentional Harm and Insurance

Abstract

“Actual malice is not insurable”. This proposition is assumed by all the old regulations on insurance contracts and is incorporated within article 19 of the ‘Ley de Contrato de Seguro’ (Spanish law of insurance contracts). However, its application within the area of civil liability insurance has proved highly problematic for both legislators and the Spanish courts, as is demonstrated by the last ten years of Supreme Court case law analyzed in the second part of this article. Generally speaking, this case law is in favor of the insurance company being obliged to pay compensation to the injured party, granting them a right of return against the fraudulent policy holder, the company not being permitted to use the fact that actual malice is not covered against the victim.The analytic part of the present article provides economic grounds for prohibiting the insurance of actual malice and considers the two available options (exclusion of cover and right of return) under which it could be implemented for both voluntary and compulsory insurance. The analysis suggests that for the former, exclusion of cover is generally the best solution, even for potential injured parties. With compulsory insurance the right of return is more socially desirable. These theoretical results enable the doubts and positions within Spanish case law to be assessed with a more detailed knowledge of their consequences.The conclusions reached are applicable not only to cases of damage caused maliciously, but also to those in which damage results from a notable increase in risk due to voluntary conduct on the part of the guilty party (drunkenness, for example).