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Valparaiso Univ. Law School

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Tuesday, October 26, 2010

Moral hazard, insurance contract division

Aaa Via Marginal has the tale of a town where back in the 1950s and 60s people were amputating their own limbs to get big paydays from insurance companies.  The story is not actually as grim as it sounds.  Some of the claimants were pretty clever, including one guy who bought some 30 insurance policies and made sure he had a tourniquet and an automatic-transmission car handy when the "accident" took off his foot.

As one insurance rep ruefully explained, "It was hard to make a jury believe a man would shoot off his foot."  No kidding.


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