Negligent Negligence?

NOTE: this post is really only for law students and/or other huge dorks. I apologize to the rest of you. Don't judge me for it!

Belgian law is based on the French system of civil law, rather than English common law. As I'm not intimately familiar with civil law systems, my understanding of their tort regimes is limited. Nonetheless, I'm going to wing this one anyway.

Upon registration here as a student, I had to pay E13 for what they call "third-party liability insurance." Always skeptical of insurance, I asked for an explanation. In broken English, the administrator said something to the effect of:

"It is for if you bring damage to someone else, then you don't have to pay. So if you damage someone or scratch a car with your bike, then you don't pay."

For reasons that should be obvious, I found this hard to believe, but upon further research the administrator appears to be correct. I don't know the precise scope or contours of this insurance plan (for instance, I don't know if it covers intentional torts, though I think it does), but its existence just blows my mind.

Insurance, as we all know, is subject to the so-called Moral Hazard problem, whereby an individual is likely to change his behavior in the presence of an insurance contract because he will not be subject to the same degree of liability in the event he fucks up. In short, he won't be as careful. This certainly isn't an insurmountable problem as both providers and purchasers think insurance in many situations is appropriate. In fact, we as a society even require it in some circumstances (as with auto insurance).

But here, I have what amounts to "tort insurance", which seems to undermine the entire purpose of tort law. Though admittedly open to debate, at least one of the underlying goals of an effective tort regime (at least in our system) is to induce people to behave optimally. Justice Learned Hand first applied a cost-benefit analysis to negligence cases in US v Carroll Towing, and we've more or less been down that path ever since.

(for any non-law people who have made it this far in the post, (1) congrats, you're a dork, and (2) a brief aside: Carroll Towing and its progeny created a system whereby negligence is assigned to incentivize individuals to take efficient levels of precaution. If the cost of a certain precaution is less than the benefit it creates, then the individual must take such precaution. When one fails to do so, he is deemed negligent and held liable for injuries incurred.)

As applied here: if I have tort insurance, the potential cost of my actions drastically decreases since I won't have to pay any damages I cause. As such, the cost of certain, potentially risky behavior is no longer greater than any benefits I may recieve from engaging in it. Ergo, jumping up and down on cars sounds like a great idea, and I am far more likely to be a reckless hooligan. Awesome.

I dunno. This country hasn't blown up yet, but if this system were implemented in the US we'd (finally?) have total anarchy! I guess it's also possible the civil law system handles these issues differently, but I'm pretty sure I'm right here. Either way, I find it interesting - food for thought if nothing else.

In other news, I really need a haircut.