What is insurance for?

The case of a young lad who was severely brain-damaged when accidentally kicked in the head by another boy whilst playing on a bouncy castle at a birthday party made headlines when the couple organising the party were held liable for damages of more then £1 million. It has made headlines again now that that ruling has been overturned on appeal. It may well go to the House of Lords where doubtless it will make headlines again. What seems to have got lost in all the discussion about this being a "victory for common sense" and a poke in the eye for what is seen as an ever-expanding "compensation culture" is that firstly the couple running the party would not have actually had to pay that money - their insurance company would have footed the bill, and secondly and more importantly, the injured boy needs round-the-clock care, and where is the money now going to come from for that? The real problem here is that the insurance company were not prepared to pay out unless liability was established - and I'm sure all other insurance companies would have taken the same line. What is needed is insurance policies which insure against risk rather than fault, and then this sad tale need never have hit the headlines.