Codification and Liability Risk: Napoleonic Code vs.

Codification and Liability Risk: Napoleonic Code vs. Common Law

In today's modern world, insurance has become an everyday concept. We ensure our homes, vehicles, and valuable property. In many states, vehicle insurance is now demanded by law of its drivers. Yet, very few of us step back and actually question where this notion of insurance actually comes from. It is a strange concept, to pay a premium monthly in order to protect oneself from damages later in the event of a catastrophe. In fact, insurance around the world is not considered the same thing. In fact, codification of insurance in various countries is influenced by different legal systems. While in the United States, insurance is influenced by common law practices, other countries in Europe, the Middle East, and South America use codification principles stemming from the Napoleonic Code.

In most Western countries, like the United States, common law is the foundation for insurance codification. Common law stems from the civil law of Europe founded early England and elsewhere in western countries, where the law stems from mercantilist principles (Schwartz, 1998). According to the research, "in medieval Europe, beginning as early as the ninth century and continuing up until the 16th century, there existed a remarkably uniform body of customary mercantile law which was applied by merchant courts in commercial disputes" (Tetely, 1999). This places the demand for insurance codification to be determined by particular regulatory body, based on particular case requirements. In most Western nations, including the United States, laws regarding the codification of insurance are dominated by common law principles (Schwartz, 1998). It is true that "the American states legal systems derived from the system of laws and courts developed over centuries in England" which were split into two separate courts: the law courts which "provided justice, however harsh or unfair the result might be, while the equity courts were theoretically more interested in reaching a fair result" (Cozen, 2001). Marine insurance also follows common law in regards to how it is set up for codification purposes (Tetely, 1999). In fact, this derives specifically from common law principle seen in maritime law. The research suggests that "Marine insurance was undoubtedly the first form of insurance," and thus background from common law practices have continued in many Western countries, like the United States (Tetely, 1999). The notion of restitution is directly from common law principles, and is often found in modern insurance constructions today (Tetely, 1999). This then secures a certain degree of reliable liability within insurance practices. Is the notion that restitution can be delivered through the common law principles when one party clearly shows the fault at destroying or damaging another party's property or home.

Yet, the notion of liability is found within both styles of legal systems that now influenced insurance codification. Liability is often secured through subrogation, which is common in both common law and Napoleonic Code legal systems. Subrogation is the principle that a party can take over the rights and responsibilities of another against a third party. Here, the research suggests that subrogation is "the substitution of one person in the place of another with reference to a lawful claim, demand or right" (Cozen, 2001). This allows for insurance companies to step in and take on the rights and remedies of their clients in situations where property has been destroyed or damaged. This is essentially the basis for insurance companies, where the insurance companies takes over the rights of the individual in order to fight a third party for any damages to property.

Yet countries using a Napoleonic Code style system have their own unique differences when compared to common law practices in regards to insurance codification. First adopted by Napoleon after the French Revolution, the code "was conceived as a complete legislative statement of principles rather than rules and as a truly revolutionary enactment designed to remake the law in the image of a new and better society" (Tetely, 1999). After you generations of being abused by cheeriness monarchies, the Napoleonic Code helped provide a reliable system to protect citizens and their property. This helped set an establishment for later insurance practices, including particular codification policies. The research claims "it was founded on the premise that for the first time in history a purely rational law should be created, free from all past prejudices and deriving its content from 'sublimated common sense'; its moral justification was not to be found in ancient custom or monarchical paternalism but in its conformity with the dictates of reason" (Tetely, 1999). This provided greater reliability and logical foundation for the practice of insurance collections and law. Examining insurance codification today, one can see some clear differences. For example, Napoleonic Code style laws "prohibit the insurance contract for the benefit of a third person where the insured is liable for the premiums and the third party is entitled to the indemnity" (Schwartz, 1998). This is one of the main differences between common law and Napoleonic style codification practices.

There are a number of governments which still derive their insurance law influence from the Napoleonic Code. Even Louisiana, here in the United States, still uses Napoleonic Code style law to mitigate insurance codification (Tetely, 1999). Several countries in Europe still follow some Napoleonic Code codification styles