Several compensation systems have arisen as alternatives to tort. The tort system makes the defendant actors pay the tort judgments out of their own pockets after the injury has taken place. However, it would be possible to be covered against the potential tort liability by, buying beforehand, liability insurance and paying a risk premium before the accident occurs. For many accidental injuries, tort liability coexists with various sources of compensation for harm such as private insurance, Social Security and Compensation Funds. The coordination problems affecting these heterogeneous compensation mechanisms have vexed lawyers for decades, and recently have started to be analyzed from an economic perspective.
Nonetheless, there are substantial differences between these alternative compensation schemes and tort liability. First, liability triggered in these alternative compensation systems does not, as does most of tort, rest on determinations of fault. Second, recoveries are not measured on a case-by-case basis, as in tort, but rather under compensation parameters determined before the injury has taken place. Finally, these non-fault systems typically compensate less for economics losses because they do not include reduction in earning capacity and exclude intangibles such as pain and suffering.