What does the substantial factor test assess in liability cases?

The substantial factor test is a legal standard used to determine whether a party's actions were a significant contributing factor to the harm or damage that occurred. This test assesses the causal relationship between the defendant's conduct and the resulting injury or damage. In liability cases, establishing that a party's actions were a substantial factor is crucial for demonstrating that they should be held responsible for the consequences of those actions.

This is particularly important in jurisdictions that allow for multi-factor causation, where there may be multiple contributing causes to an injury. By focusing on whether a party's conduct has played a critical role in bringing about the injury, this test helps courts determine liability based on the merits of the case rather than on peripheral issues.

In contrast, the other options address different aspects of liability litigation that do not pertain directly to causation. For instance, assessing the overall financial cost of liability claims or the likelihood of settlement out of court involves considerations of the economic and procedural ramifications of the case rather than the fundamental question of what caused the injury. Similarly, determining whether insurance coverage applies is a matter of policy interpretation and does not directly connect to the causal relationship assessed by the substantial factor test.