For the most seriously injured accident victims, the cost of coping with devastating injuries is so high that they might be compelled to seek compensation from any and all available sources, including co-contributors who may only indirectly have contributed to the victim's misfortunes.

This reality runs counter to the false impression that litigants are typically unassertive and will be content with the proceeds of available insurance, even if the amount falls far short of adequate compensation for their injuries.

We often hear that plaintiffs are so angry that they would prefer to punish the culprits than accept compensation from an insurer. Sometimes, plaintiffs feel that even after a generous insurance settlement, they lack closure because the culprit was not adequately punished for causing the injuries.

We don't have a good database of cases where there wasn't enough insurance to satisfy a judgment, but here are a few recent examples:

• Research In Motion (RIM) Ltd. has recently agreed to pay US$450 million to a U.S. patent-holding firm that won a patent infringement lawsuit against RIM in 2003. The lawsuit was subsequently upheld by a U.S. Federal Appeals Court. We believe that this settlement was predominately uninsured.
• Following an adverse jury verdict in Biloxi, Mississippi, the Loewen chain of funeral homes was forced to pay US$175 million to settle a directors and officers dispute. The 1995 settlement was largely uninsured and was paid partially in cash and partially in stock, so the plaintiffs ended up as part-owners of the business.
• The Globe & Mail newspaper reported in February 2005 that Upper Canada College (UCC), the exclusive private boys school in Toronto, is trying to resolve many legal actions alleging sexual abuse by a long-serving teacher. The cost of the settlements is expected to exceed the available insurance proceeds. To avoid increasing tuition fees, UCC plans to sell off valuable land and artwork, much of which was given or endowed to the school.
• The Anglican Church of Canada and the Presbyterian Church agreed to settlements worth $35 million for their part in the residential schools abuse litigation. These settlements were substantially uninsured.
• A western Newfoundland Catholic diocese is facing legal actions worth more than $50 million for sexual abuse claims. It is facing reorganization under the Bankruptcy and Insolvency Act and is hoping it can get its insurers to pay for some of the claims.

Exposure to large losses is increasing at an alarming rate. We recommend that you put prudent limits on self-insurance—self-insure frequency layers, not severity layers.