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The basic premise behind law enforcement legal liability insurance is straight-forward: if a police department has insurance and it gets sued, the insurance company picks up the legal tab. This gives insurance companies a strong motivation to keep the departments that they insure out of court. In the words of John Rappaport, a law professor at the University of Chicago, this transforms the insurance companies into “surrogate regulators.”

As a rule, law enforcement agencies do not go out of their way to get sued. Police chiefs and city mayors certainly care about their legal liability. But according to Rappaport, insurance companies might care better.

“They have the profit motive,” he says. “The insurance company is the one that wants to turn around and put pressure on the police department to makes it rank-and-file officers behave better.”

In contrast, city officials have “a more complicated profile,” he says.

Aside from not getting sued, a police chief may also want to minimize crime, to keep the police union happy, or to stick to the department’s budget.

Imagine a department is offered a particular training program that promises to improve officer behavior and reduce the risk of lawsuit. But let’s say it also costs tens of thousands of dollars and is likely to irk the cops on the street who feel like they're being told how to do their jobs. A police chief will have to prioritize these various concerns. Minimizing legal liability may not always come out on top.

An insurance company, on the other hand, doesn’t care about the crime rate or the union or the city budget. It just wants to minimize payouts.

“It’s not too hard to imagine scenarios, especially where a city government is not working particularly well, where the insurance company might have the edge [at minimizing risk],” says Rappaport.

This runs against the conventional wisdom. Up until just a few decades ago, most towns actually prevented their police departments from buying liability insurance. After all, the entire premise of this type of coverage is that law enforcement agencies are insulated from the consequences of their own risky behavior.

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