# Research article: moral hazard and the all-or-nothing principle

URL: https://insurancelawestonia.ee/blog/2021-07-01-research-moral-hazard-proportionality/
Author: Dr Olavi-Jüri Luik, Partner, Head of Insurance Law, attorney at law (Advokaadibüroo WIDEN OÜ)

> Luik and Volberg 2021: should insurance law move from the all-or-nothing principle to proportionality? A legal and philosophical view.

> **Article:** O.-J. Luik, M. Volberg, "Philosophical battle against moral hazard: do we need law methodology change from 'all or nothing principle' to 'principle of proportionality'?", Methodological Problems of Civil Law Research 2021/3, pp. 124–138. [DOI: 10.33397/2619-0559-2021-3-3-124-138](https://doi.org/10.33397/2619-0559-2021-3-3-124-138) (published 2021)

Co-author: philosopher Mats Volberg.

## Research question

As the title indicates, the article asks whether insurance law should move from the all-or-nothing principle to proportionality when dealing with moral hazard, the risk that an insured behaves less carefully because cover exists. The traditional answer has been severe: breach of a duty costs the policyholder the entire claim.

## Content

The article is interdisciplinary, combining the insurance law question with a philosophical analysis of what a fair response to policyholder carelessness is. The abstract could not be opened when this post was prepared, so detailed conclusions are not reported here. The topic fits Luik's other work, which consistently supports a proportional approach (see [safety requirements in non-life insurance](https://insurancelawestonia.ee/blog/2016-07-01-research-safety-requirements-non-life-insurance) and the [comparative article on precautionary measures](https://insurancelawestonia.ee/blog/2022-09-22-research-precautionary-measures-indemnity-insurance)).

## Relevance for Estonian law

Proportionality is now firmly established in Estonian Supreme Court practice: breach of a duty of care primarily allows the insurer to reduce payment to the extent the breach affected the loss, and the insurer bears the burden of proving it (Law of Obligations Act (võlaõigusseadus, VÕS) § 452(2)).

## Related pages

- [Safety obligations and proportionality](https://insurancelawestonia.ee/estonian-insurance-contract-law/safety-obligations-and-proportionality)
- [Supreme Court: safety requirements and proportionality](https://insurancelawestonia.ee/supreme-court/safety-requirements-and-proportionality)