Moral hazard

One of the problems with insurance is the moral hazard. If someone else pays for your car to get fixed, aren't you more likely to wreck it? Wikipedia (in an article citing to Tom Baker, the author of my pimpin' insurance law casebook from last semester) defines moral hazard as "the name given to the increased risk of problematic (immoral) behavior, and thus a negative outcome ('hazard'), because the person who caused the problem doesn't suffer the full (or any) consequences, or may actually benefit." Car insurance increases car accident rates due to the moral hazard.

So what do we think about Catholic Churches that can buy insurance against sex abuse suits?
From Slate: "Since the spike in sex-abuse lawsuits in the mid-1980s, churches have also had the option to take out extra liability policies for damages related to sexual misconduct."

The JP, wanting to diligently keep diddling priests away from young children around the nation (the world!), is a little surprised that this type of insurance isn't against public policy. It violates public policy in California to sell insurance that covers intentional torts, for example. Both California and Kansas make it illegal to insure against punitive damages for the same reason. These are types of liability over which the insured has nearly-unlimited control (the insurance company would have to prove intentionality to deny coverage) and so we want the person in control to be motivated to make good decisions.

How about we stop allowing churches to hand over $227 million worth of damages over to their insurer and just bankrupt them if they abuse too many children? If it were any other business, that's how it'd go, and this is a particularly hard place for the church to get holier-than-thou.