Historically, insurance exchanges were formed by individuals or corporations engaged in a similar line of business who together undertook to indemnify one another from certain kinds of risks by a mutual exchange of insurance contracts. Often times insurance exchanges were started to avoid questionable risk pools. Today, policyholders in a reciprocal insurance exchange—often known as “subscribers”—act through a common attorney-in-fact and are simultaneously both insurers and insureds. This method of providing insurance is different from mutual insurance companies because insurance exchanges do not have a corporate existence; instead, they are simply an unincorporated association of individuals who swap potential liabilities between themselves.
All tort cases, at the broadest level, consist of two elements: liability and damages. If the defendant prevails on liability, the plaintiff necessarily recovers nothing. However, the converse is not always true. The Virginia Supreme Court has reaffirmed twice in the past two years that a plaintiff who prevails on liability is not necessarily entitled to recover any damages. As long as the evidence supports such conclusion, the jury is free to decide that the plaintiff was not injured and award no damages.