David A. Hoffman (University of Pennsylvania Carey Law School) & Rick Swedloff (Rutgers Law School) have posted Insurers as Contract Influencers on SSRN. Here is the abstract:
Contract boilerplate degrading consumers’ litigation options is omnipresent, but a little mysterious. And that’s not just because no one reads it. We know that terms mandating arbitration, exculpating liability, requiring individualized litigation and shifting risk have proliferated in the last generation. But consumer contracts’ production and efficacy has been understudied. We bring to bear a new source of information about these questions from the literature on insurance-as-governance, asking how insurers influence boilerplate’s adoption and content.
Interviewing participants in the liability insurance industry, we show that insurers refine boilerplate language, teach policyholders about its efficacy, and decline coverage when itis absent. At the same time, they rarely offer price breaks for adopting boilerplate, suggesting that at least some of the cost savings from consumer boilerplate may end up in the coffers of insurance firms rather than their clients. Insurers are surprisingly skeptical about the value of terms that have particularly excited proceduralists and consumer contract scholars—arbitration and liability waiver clauses—and believe their spread does not materially affect the risks that they insure. Overall, these qualitative findings suggest the value of a new, systematic, approach to the study and regulation of boilerplate.
Highly recommended.
