Chapter 4: Liability Insurance
Limits of Liability
The maximum dollar amount that the insurance company will pay for claims covered under your policy
Per Occurence
The most an insurance company will pay for claims arising from a single incident. with Auto, comprises BI sustained by all parties in a single auto accident.
Property Damage
The physical injury to tangible property, including loss of use
Tort Law
a civil wrong, other than a breach of contract, that violates the rights of others. A person who suffers injury resulting from a tort is entitled to receive damages, from the person responsible or liable for those injuries. Incarceration is not a penalty used.
Licensee
a person on your property with your consent, but usually for business purposes that benefit the licensee. -slightly less responsibility is owed
Intervening Cause
a separate event or action that breaks the direct connection between a person's actions and an injury or loss to another person. Breaks and alters the natural and continuous sequence of events that follows the person's actions. (proximate cause)
Occurrence
continuous or repeated exposure which results in BI or PD neither expected nor intended by the insured.
Negligence
the failure to do or not do what the reasonable person would or would not do in the same circumstances to protect others from an unreasonable chance of harm. -Accidental/Unintentional - NEVER intentional
Occurrence Policy
the occurrence of injury or damage is the trigger. -Liability will be covered if the injury or damage occurred during the policy period, regardless of when the claim was made.
Bodily Injury
the physical injury including death to another person
Retroactive Date
the start date of the first claims-made policy you are actively renewing.
Accidents
unintended and unforeseen event happening at a known place and time
Strict/Absolute Liability
you are responsible for injuring another person regardless of negligence or intent. -Even though you may not have intended to commit a wrong, you are still held responsible for your actions. -Most commonly associated with Defectively Manufactured Products
Establishing Negligence
4 factors must be involved: 1. Legal Duty owed 2. Breach of legal duty owed 3. Proximate cause 4. Damages
Exclusions:
-damage to property owned by the insured -damage to property in the insured's care, custody, control -BI to the insured -losses covered under workers comp laws -losses covered under nuclear energy liability policies -injuries or damages caused intentionally by insured
Damages Include:
1. Bodily Injury 2. Property Damage 3. Personal Injury 4. Advertising Injury
Split Limits - usually expressed as 3 amts = 250/500/100
1. Per Person - reps the most the policy will pay for accidental BI to any ONE person involved in an accident. 2. Per Occurrence - Max amount the policy will pay for ALL persons involved in a single accident 3. Property - Reps the max amount the policy will pay for PD for each occurrence.
Liability Insurance is a 3 Party Contract consisting of:
1. The Insured 2. The Insurance Company 3. An Unknown Third Party, the other person
Compensatory Damages
Actual Damages, intended to compensate the other person for loss, injury, or harm suffered as a result of another's breach of duty.
Comparative Negligence
Allows a determination of liability to be made even when both parties have contributed to the loss.
Special Damages
Easy to calculate: medical costs, repair or replacement of damaged property, or lost earnings.
Claims-Made Policy
Coverage is triggered when the claim is made. -Coverage will respond to incidents arising on or after the policy retroactive date and which are reported during the term of the policy.
Supp Payments include:
Defense Costs Prejudgment Interest Post Judgment Interest Bonds First Aid Loss of Earnings
Assumption of Risk
If the other person knew the consequences of his/her actions and voluntarily accepted any risk associated with his/her actions, then he/she would be solely responsible for any resulting injury.
Liability
Legal responsibility for damage to another party's person or property.
Absolute Liability
Liability without fault. Liability for which there is no excuse. -Imposed for ultra-hazardous activities or products such as demolition using explosives or products using radioactive materials. Also dangerous animals would fall under this
Aggregate Limit/Annual Aggregate Limit
Max dollar amount your insurance co will pay to settle your claims.
Combined Single Limit
One combined limit that applies to both BI and PD. Expressed as one amount, such as $500,000. -Limits typically on a per occurrence basis.
Occurrence versus Aggregate Limits
Per occurrence limit - ins will pay up to the occurrence limit for that one occurrence. Once claim is paid, insurer restores policy to its original limit until the next occurrence. No limit to total occurrences. Aggregate Limit - will not be restored until the annual renewal date of the policy
Legal Duty Owed
There is reasonable expectation that you owe a duty to protect the rights and property of others. -You are expected to behave like a reasonable or prudent person (reasonable person rule) in the affairs of daily life.
Breach of Legal Duty Owed
There must be a breach of the legal duty owed.
Advertising Injury
This coverage is similar to PI, except for a business. Covers the following offenses in connection with the insured's advertising of its goods or services; libel, slander, invasion of privacy, copyright infringement, and misappropriation of advertising ideas.
Medical Payments to Others (Med Pay)
This section of your liability coverage will pay regardless of who is at fault. -Dr fees, x-rays, hospital stays, etc.
Purpose of Liability Contracts
To protect your assets if you injure another person or his/her property; and are legally obligated to pay for the damage. -protect you and will pay the other person on your behalf when you accidently cause damage or injury to him/her.
Personal Injury
Types of insurable offenses that produce harm other than bodily injury such as false arrest, detention or imprisonment, malicious prosecution, wrongful eviction, slander, libel, and invasion of privacy
Criminal Law
deals with public wrongdoings which are a violation of a duty owed to society for which society, as a whole, seeks punishment of the violator in a criminal action. -Criminal penalties: incarceration, monetary funds, or both.
General Damages
difficult to measure: physical or emotional pain and suffering, loss of companionship, disfigurement, loss of reputation or impairment of mental or physical capacity, etc.
Coverage Trigger
event that must occur before a liability policy will respond to a loss.
Punitive Damages
exemplary damages intended to punish the defendent and discourage others from engaging in similar conduct. -awarded where compensatory damages are deemed an inadequate remedy. -Liability policies often exclude punitive damages
Statute of Limitations
laws holds that certain types of lawsuits must be filed within a set time limit of the occurrence to be valid.
Vicarious Liability
liability that you incur due to the actions of others, such as family members or employees.
Proximate Cause
one event that sets in motion an unbroken chain of other events that causes a loss, like a ripple effect. -the loss could not have happened without proximate cause -If an independent event breaks the chain of events and sets in motion a new chain, this INTERVENING cause becomes the proximate cause. -Negligent act is the proximate cause of an injury, if the injury is the natural and probable result of the act.
Supplementary Payments
paid in addition to the policy's regular limit of liability. Coverage provides for the ins co to pay all of the exp that the insured insurers at its request to assist in the investigation or defense of a claim
Fire Legal Liability Coverage
pays for amounts that a tenant is legally obligated to pay for direct loss caused by PD to tangible property of others in the tenants care or custody. PD may result directly from fire or explosion occurring within the policy period