It is not too cynical to suggest that a manufacturer’s product liability, under judicial precedent in Michigan find most other states, may now be summarized as follows:

A manufacturer is liable to any person who can trace his harm to the manufacturer’s product, even if that person has voluntarily waived that protection, or if the precipitating cause of the harm was the misuse of the product by a third person; the manufacturer may be held negligent even if the harm was not foreseeable at the time of manufacture; the manufacturer is liable if he fails to warn the user of the dangers of misusing the product, even if the user misuses the product precisely because he wants to experience those dangers; the manufacturer is also liable if he warns the user regarding misuse and the user chooses to disregard the warning. He can be liable even though the product has not failed in any way; and he can be liable even if there is no proof that his product caused the harm, or even if his product did not cause the harm.

Under these standards, can there be any doubt that manufacturers have been asked to provide blanket insurance to any person who suffers any harm remotely tied to use of a product?

Unfortunately, manufacturers are uniquely unsuited to fill this role. The risks for which any manufacturer is liable, are unpredictable, and largely uncontrollable, by either the manufacturer or his insurer, when the only rules are how a plaintiff should recover, and not when or whether a plaintiff should recover. Furthermore, because manufacturers must normally charge the same price to all consumers, adverse selection of the risk pool takes place whenever manufacturers try to pass this insurance cost on to consumers, as Professor James and Justice Traynor theorized they should.

The risk independence necessary to the proper functioning of insurance markets is also destroyed when a court rules that an entire product was negligently designed or marketed, even though that product does what it was intended to do and meets the non-negligent safety standards it was intended to meet. For example, after the decision in Rutherford, the manufacturer faced liability for every such model auto it had manufactured. In a more typical situation, testing and quality control can catch manufacturing defects. If a defective product gets through the system and causes an injury, the plaintiff can be awarded restitution. The defendant’s total potential liability has not increased, as the defendant can still predict the number of products which will slip through its quality control system, and a defect in one particular product does not render the entire product line a source of liability. When one judicial ruling can create liability for an entire product line, this predictability disappears. An underwriter considering insuring the product must consider the possibility that the entire product line will be declared defective, generating massive liability. And because the manufacturer can be held liable even if the defect was not foreseeable, there is no realistic way to control or predict this potential liability.

The plaintiff is frequently exempted from any responsibility for his own misuse of the product (so long as his misuse was foreseeable by the manufacturer). Coupled with awards of punitive damages and the incipient trend to award damages for intangible harms, this creates an element of moral hazard that undermines the insurance system.

Plaintiffs are insulated from their own risky behavior. The assumption grows that any product must be safe in all circumstances, which of course is not true. Products must be used correctly, and if they are not, some danger of accident exists no matter how carefully designed the product is. Liability is no longer based on causation, but on loss spreading. This idea is not only based on the incorrect assumption that, "... the risk of injury can be insured by the manufacturer and distributed among the public as a cost of doing business," [81] but it fails to take into account any notion of the justice resulting from its implicit redistribution scheme. Indeed, even in its redistributive function it has failed.