The common law rule of joint and several liability, sometimes called the “deep pocket” rule, makes each and every defendant in a tort lawsuit liable for the entire amount of the plaintiff’s damages regardless of the defendants’ relative degrees of fault or responsibility. The effect of joint and several liability is to convert lawsuits into searches for financially viable defendants. This causes defendants to settle out of court for fear of being found fully liable for substantial judgments. On the other hand, proportionate liability is the concept that a party is only responsible for the damages caused by his own negligence.

Some self-insured groups offer rates, especially for workers’ compensation coverage, that are less than the rates for “guaranteed cost” insurance. They require that you sign a contract with a “joint and severable” liability clause. We have even heard of one who requires that your attorney also sign the agreement, indicating he / she has explained the ramifications of this contract to you.

BE CAREFUL! If the plan experiences losses that they cannot pay, they will look to each of the plan participants to pay the amount of losses they cannot pay. And yes, if you are the only entity that has assets, they will look to you for the total amount.