RMI Test 2 Part 1

Part D- Coverage for Damage to your Auto- limit of liability a. partial loss

(ex: smashed fender) only the amount necessary to repair or replace the damaged property with property of like kind and quality will be paid.

No-fault Auto Insurance: The no-fault concept pros and cons

-Pros: Proponents of no-fault laws argue that an alternative system is needed because of defects in the liability system. These defects: difficulty in determining fault, inequity in claim payments, high transaction costs and attorney fees, fraudulent and inflated claims, and delay in payments. -Cons: Supporters of the tort system argue that defects of the negligence system are exaggerated, claims of efficiency and premium savings are exaggerated, court delays are not universal, safe drivers may be penalized, there is no payment for pain and suffering, and the torts liability system needs only to be reformed.

Part B: Medical Payments Coverage- exclusions

-Vehicles with fewer than 4 wheels -use as a public vehicle (taxi, but not uber or lyft) -using the vehicle as a residence -Injury occurring during course of employment (see workers-comp) -vehicle furnished or made available for the named insured's regular use -vehicle furnished or made available for the ruler use of any family member -using a vehicle without a reasonable belief the person is entitled to do so -vehicle used in the business of an insured -nuclear weapon/radiation/or war -racing vehicle

Part B: Medical Payments Coverage- other insurance

-auto medical payments coverage: if other auto medical payments insurance applies to an owned vehicle, the insurer pays its pro rata share of the loss based on the proportion that its limits bear to the total applicable limits. -medical expense insurance: medical payments coverage is excess with respect to a non owned vehicle. Therefore if you were injured in my car while I was driving, my medical expense insurance would be used to pay for your medical bills. Anything more than my limit would be paid for by your medical expense insurance.

Part A liability Coverage: insurer obligations

-duty to defend (supplemental coverage): The insurer agrees to defend you and pay all legal defense costs. The defense costs are paid in addition to the policy limits. However, the insurer's duty to settle or defend the claim ends when the limit of liability has been exhausted by payment of a judgement or settlement. Meaning, the insurer cannot deposit the policy limits into an escrow account and walk away without first defending the insured. The obligation to defend ends when the policy limits are exhausted by payment of a judgement against the insured or settlement with a claimant. The duty to defend also ends if the claim is settled for less than the policy limits. -duty to indemnity (legal liability): The insurer has no obligation to defend any claim not covered by the policy. For example, if the accident was caused intentionally, the insurer has no obligation to defend you because intentional acts are specifically excluded.

Part A: liability Coverage: limits

-split limit: means that the amount of insurance for bodily injury liability and property damage liability are stated separately. For example, split limits of $25,000/$50,000/$25,000 mean that you have bodily injury liability coverage up to $25,000 for each injured person and a maximum of $50,000 of bodily injury coverage for each accident. You also have $25,000 of property damage liability coverage. -single limit: applies to both bodily injury and property damage liability; the total amount of insurance applies to the entire accident without a separate limit for each injured person. (ex: a single limit of $500,000 would apply to both bodily injury and property damage liability in any combination of up to $500,000)

Liability Areas of Concern: B. Professional Liability

1. Architects, Engineers 2. Accountants, Lawyers 3. Agents, Brokers

Tort Reform Initiatives

1. Caps on Noneconomic damages 2. Reinstating the State-of-the-Art Defense 3. Restricting Punitive Damages 4. Modifying the Collateral Source Rule 5. Modifying the joint and several liability rule 6. Use of Alternative dispute resolution (ADR)

civil vs criminal wrongs

1. Civil Wrongs -wrongs against private parties -generally insurable 2. Criminal Wrongs -wrongs against society -non-insurable

Tort Liability: A. Elements of Negligence

1. Existence of a legal duty 2. Breach of a duty of care (negligence) 3. Damage or injury 4. Casual link between negligence and damage

Tort Liability B. Possible Defenses

1. No negligence 2. Contributory negligence 3. Comparative negligence 4. assumption of risk doctrine 5. statute of limitations

No-fault Auto Insurance: Types of No-fault plans

1. Pure: accident victims could not sue at all, regardless of the amount of the claim, and no payments would be made for pain and suffering. 2. Modified: an injured person has the right to sue a negligent driver only if the bodily injury claim exceed the dollar or verbal threshold. 3. Add-on: pays benefits to a victim without regard to fault, and the injured person still has the right to sue the negligent driver who caused the accident. 4. Choice no-fault: motorists can elect to be covered or not covered under the state's no-fault law and pay lower premiums, or they can retain the right to sue under the tort liability system and pay higher premiums.

Tort Reform: major defects

1. rising tort liability costs 2. Inefficiency in compensating injured victimes 3. uncertainty of legal outcomes 4. high jury awards 5. long delays in settling lawsuits

contracts and statutes

2. Contracts -hold harmless -breach of contract 3. Statutes -Workers Compensation -Environmental Protection Agency -Equal Employment Opportunity Commission

Part C: Uninsured Motorists Coverage- Insured persons

3 groups are covered under the uninsured motorists coverage 1.) The named insured and his or her family members 2.) Any other person while occupying a covered auto 3.) Any person legally entitled to recover damages because of bodily injury to a person described previously (example: if the named insured is killed by an uninsured motorist, the surviving spouse could collect damages under the uninsured motorists coverage

Part A: liability coverage: Exclusions

A lengthy list of exclusions applies to the liability coverage under the PAP. They are summarized as follows: a. intentional injury/damage is specifically excluded (Ex: "road rage") b. use as a public vehicle (taxi): The intent here is to exclude coverage if the insured makes the vehicle available for hire to the general public. (However this exclusion does not apply to a share-the-expense carpool, ex: lyft or uber) c. non permissive use of another's vehicle: if a person uses a vehicle without a reasonable belief that he or she is entitled to do so, the liability coverage does not apply. d. vehicle racing facility: liability coverage does not apply to any vehicle while it is located inside a reading facility for the purpose of competing in or preparing for a prearranged racing or speed contest

Liability Areas of Concern

A. Medical Malpractice B. Professional Liability C. Corporate Governance: D. Fiduciary Liability E. The "Sharing Economy"

Approaches for compensating auto accident victims

A. financial responsibility laws B. Compulsory Insurance laws C. Unsatisfied Judgement funds D. Uninsured motorists coverage E. "No pay, no play" Laws F. No-Fault auto insurance

Part F: General Provisions- Termination 2 types

An important provision applies to termination of the insurance by either the insured or insurer a. cancellation: the named insured can cancel at any time by returning the policy to the insurer or by giving advance written notice of the effective date of cancellation b. non-renewal: The insurer may also discontinue coverage through non-renewal of the policy at the end of the coverage period. If the insurer decides not to renew the policy, the names insured must be given at least 20 days notice before the end of the policy period.

Part D: Coverage for Damage to your auto- Insuring agreement a. collision coverage

Collision (the upset of your covered auto or non owned auto or its impact with another vehicle or object). Collision losses are paid regardless of fault. If you cause the accident, your insurer will pay for the damages to your car, less any deductible.

Tort Liability- B. Possible Defenses 1. no negligence

Considered an act of God

Part D- Coverage for Damage to your Auto- Appraisal provision

Contained in the PAP, this handles disputes over the amount of a physical damage loss. The insured may claim that the car is worth more than the amounts stated in various sources listing auto values. To resolve this, either party can demand an appraisal of the loss from two competent and impartial appraisers. The appraisers sects an umpire, states separately the actual cash value of the car and the amount of the loss. IF the appraisers fail to agree, they submit their differences to the umpire to decide. A decision by any two parties is binding on all.

Liability Areas of Concern: D. Fiduciary Liability

Covers individuals who administer pension or employee benefit plans and have a fiduciary responsibility to manage the funds in the best interests of the plan participants.

Liability Areas of Concern: E. The "Sharing Economy"

Creates new liability exposures. examples: car sharing, ride sharing, and room sharing.

Tort Liability

Elements of Negligence Possible Defenses Imputed Negligence

Tort Liability- B. Possible Defenses 3. comparative negligence

Enacted because of the harshness of contributory negligence laws. They allow an injured person to recover damages even though he or she has contributed to the injury. Under this law, if both the plaintiff (injured person) and the defendant (party accused of negligence) contribute to the plaintiff's injury, the financial burden of the injury is shared by both parties according to their respective degrees of fault.

Part E: Duties after an accident or loss- Notification a. Police/ambulance

If someone is hurt, an ambulance should be called immediately. If there are bodily injuries, or the property damage exceeds a certain amount, you must notify the police. You should give the other driver your name, address, and the name of your agent and insurer and request the same info from him/her. You should also get the name and address of any witnesses. DO NOT ADMIT FAULT, the question of who caused the accident will be determined by the insurers include of by a court of law.

Part A: liability coverage: Out of state coverage

If the accident occurs in a state other than where the covered auto is principally garaged, and that state has a financial responsibility law with higher liability limits that the limits show in the declarations page. The PAP automatically provides the higher specified limits. The PAP also lists the required minimum amounts and types of coverages of states with compulsory insurance laws (requiring nonresidents to have insurance whenever her or she drives in that state).

Part D- Coverage for Damage to your Auto- limit of liability b. total loss

If the cost of repairs exceeds the vehicles actual cash value, the vehicle may be declared a constructive total loss, and the amount paid is the actual cash value less deductive. Insurers declare a vehicle to be a total loss if the estimated cost of repairs plus the salvage value exceeds the actual cash value of the car.

Part A liability coverage: other insurance

In some cases, more than one liability policy covers a loss. If other applicable liability insurance applies to an owned vehicle, the insurer pays only its pro rata share of the loss. The insurer's share is the proportion that its limit of liability bears to the total applicable limits of liability under all policies.

Tort Liability- B. Possible Defenses 4. assumption of risk doctrine

Is another defense that can be used to defeat a claim for damages. Under this doctrine, a person who understands and recognizes the danger inherent in a particular activity cannot recover damages in the event of an injury. In effect, the assumption of risk bars recovery for damages even though another person's negligence causes the injury.

Types of Civil wrongs

Legal Liability: -torts -contracts -statutes

Part A: Liability Coverage

Liability Coverage is the most important part of the Personal Auto Policy, as legal liability arising from negligent use of an auto can be quite large. Liability coverage protects a covered person against a lawsuit or claim arising out of the ownership or operation of a covered vehicle

Part B: Medical Payments Coverage

Medical payments Coverage is frequently included in the Personal Auto Policy. Medical payments are paid without regard to fault.

Eligible vehicles

Only certain types of vehicles are eligible under the PAP. Any eligible vehicle is a four-wheeled motor vehicle owned by the insured or leased by the insured for 6 or more consecutive months. Thus a private passenger auto, station wagon, or sport utility vehicle owned by the insured is eligible for coverage

Part D: Coverage for Damage to your auto- transportation expense (loss of use)

Part D also pays for temporary transportation expenses. The insurer will pay, without application of a deductible, up to $20 daily to a maximum of $600 for a temporary transportation expenses incurred by the insured because of loss to a covered auto. Transportation expenses resulting from a collision loss are paid if the auto is covered by collision coverage. Likewise, transportation expenses resulting from an other-than-collision loss are paid if the auto is covered by other-than-collision loss coverage.

Part D- Coverage for Damage to your Auto- limit of liability d. diminution of value issue

The Insurance Services Office allows Insurers to clarify that they do not cover any loss in market or resale value (diminution in value) from a direct and accidental physical loss to a covered auto.

PAP coverages 6 Parts

The PAP consists of a declarations page, a definitions section, and the following six parts: 1. Part A- Liability Coverage 2. Part B- Medical Payments Coverage 3. Part C- Uninsured Motorists Coverage 4. Part D- Coverage for Damage to your auto 5. Part E- duties after an accident or loss 6. Part F- General Provisions

Part F: General Provisions- Territory

The PAP provides coverage only in the US, its territories or possessions, Puerto Rico, and Canada. The policy also provides coverage while a covered auto is being transported between the ports of the US, Puerto Rico, or Canada.

Part D- Coverage for Damage to your Auto- limit of liability

The amount paid for a physical damage loss to a covered vehicle is whatever costs less; either A.) actual cash value of the damaged/stolen property or B.) amount necessary to replace the property with other property of like kind/quality

Part D: Coverage for Damage to your auto- Insuring agreement e. deductible options

The collision coverage is typically written with a straight deductible of $250, $500, or some higher amount. Coverage for other-than-collision losses is also normally written with a deductible. They are designed to prevent small claims, hold down premiums, and encourage the insured to be careful in protecting the car from damage or theft.

Tort Liability- A. Elements of Negligence 2. Breach of duty of care (negligence)

The failure to perform the legal duty required by law; that is you fail to comply with the standard of care to protect others from harm.

Tort Liability- A. Elements of Negligence 3. Damage or injury compensatory damages punitive (exemplary) damages

The injured person (claimant) must show damage or injury as a result of the action or inaction of the alleged tortfeasor (alleged wrongdoer) a. compensatory damages: awards that compensate injured victims for the losses actually incurred -economic damages: (aka special damages) awards for losses that can be determined and documented, such as medical expenses, lost earnings, or property damage -non economic damages: (aka general damages) awards for losses that cannot be specifically measured or itemized, such as compensation for pain and suffering, disfigurement, or loss of companionship of a spouse. b. punitive (exemplary) damages: awards designed to punish people and organization for shockingly bad acts so that others are deterred from committing the same wrongful act. Awards for punitive damages are often several times the amount awarded for compensatory damages. Really only do this for really bad actor involved and the court wants to make an impression.

Approaches for compensating auto accident victims d. uninsured motorists coverage

The injured person's insurer agrees to pay the accident victim who has a bodily injury (or property damage in some states) caused by an uninsured motorist, by a hit-and-run driver, or by a negligent driver whose insurer is insolvent.

Part D: Coverage for Damage to your auto- Insuring agreement

The insurer agrees to pay for any direct and accidental loss to a covered auto or any non owned auto as defined in the insuring agreement, including their equipment, less any deductible. Two optional coverages are available: collision or loss-other-than-collision coverage

Tort Reform Major Defects: 2. Inefficiency in compensating injured victimes

The number of class-action lawsuits has increased over time. However, critics charge the plaintiffs often receive relatively small amounts for their injuries or doubtful benefits (such as coupons or discounts to buy the defendant's products), while attorneys receive large and disproportionate share of the settlement. Additionally, the injured victims receive less than half of each tort dollar paid.

Tort Reform Major Defects: 1. rising tort liability costs What do these costs include? What do total tort costs include? Effect on our Economy?

These costs include benefits paid or expected to be paid to third parties, defense costs, and administrative costs. Total tort costs include injured costs excluding medical malpractice, self-insured costs excluding medical malpractice, and medical malpractice costs. Tort costs are a relatively heavy burden on our economy, they are substantially higher in the US than any other industrialized companies, making it difficult for the US to compete in global markets.

Part C: Uninsured Motorists (UM) Coverage

This coverage pays for bodily injury (and property damage in some states) caused by an uninsured motorist, by a hit-and run driver, or by a negligent driver whose insurance company is insolvent.

Types of Torts

Torts -negligence: the failure to exercise the standard of care required by law to protect others from an unreasonable risk of harm -Intentional torts: legal liability can arise from an intentional act or omission that results in harm or injury to another person or damage to the person's property. (ex: assault, battery, trespass) -strict liability: (aka absolute liability) means that liability is imposed regardless of negligence or fault (ex: manufacturing of explosives, owning a wild animal)

Tort Liability- B. Possible Defenses 2. contributory negligence

Under strict application of common law, if you contributed in any way to your own injury, you cannot collect damages.

Auto Insurance for High-Risk Drivers 1. Auto Insurance Plans (assigned risk plans)

Under such a plan, all auto insurers in the state are assigned their proportionate share of high-risk drivers based on the total volume of auto insurance premiums written in the state.

Tort Reform Initiatives: 5. Modifying the joint and several liability rule What happens under this rule? How could this happen? What has happened in many states?

Under the joint and several liability rule, several people may be responsible for injury, but a defendant who is only slightly responsible may be required to pay the full amount of damages. This could happen if one defendant has "deep pockets" while the other defendant was broke. Under tort reform, this rule would be modified many states now prohibit application of this rule to noneconomic damages, such as pain and suffering

Part B: Medical Payments Coverage- Insuring agreement

Under this provision, the company will pay all reasonable medical and funeral expenses incurred by an insured for services rendered within 3 years from the date of the accident. -Covered expenses: medical, surgical, X-ray, dental, and funeral -benefit limits range 1,000-10,000 per person and apply to each individual who is injured in the accident -NOT based on fault (if it is your fault you, and other passengers, can still receive medical payments)

Part D: Coverage for Damage to your auto- Insuring agreement d. collision damage waiver (CDW)

When you rent a car and check the CDW box, you are relieved of financial responsibility if the rental car is damaged or stolen. It has many exceptions (the accident happened when speeding/drunk driving/ or driving on unpaved roads) and cost an additional daily fee. Some say that it is not necessary if you carry collision and comprehensive insurance on your own car because the coverages also apply to the rental car. Others say that it is a good precaution because of numerous restrictive provisions in the rental agreement, incomplete protection under the PAP, and credit card limitations.

Tort Liability- B. Possible Defenses 5. statute of limitations

a law prescribing the period within which certain types of causes of action must be brought. This period usually begins to run when the injury or damage occurs. Each state has enacted statutes that prescribe the period within which suits must be filed that vary from claim to claim.

Part C: Uninsured Motorists Coverage- uninsured vehicles 2 types

a motor vehicle or trailer for which no bodily injury liability insurance policy applies at the time of the accident Types: a. other at-fault insurer with no coverage OR has a liability policy at the time of accident BUT 1.) the insurer denies coverage or becomes insolvent OR 2.) the liability policy amount of insurance on that vehicle is less than the amount required by the state's financial responsibility law b. a hit-and-run vehicle is considered to be an uninsured vehicle. Thus if the named insured or any family member is struck by a hit-and-run driver while occupying a covered auto or non-owned auto, or while walking, the uninsured motorists coverage will pay for the injury

Part D: Coverage for Damage to your auto- Insuring agreement c. non-owned autos

a private passenger auto, pickup, van, or trailer not owned by or made available for the regular use of the names insured or family member, while it is in the custody of the named insured or their family member. (ex: Ellen borrows Mike's car, Ellen's collision coverage and other-than-collision coverage on her car applies as excess to any physical damage insurance on the borrowed car.) This coverage also applies to a temporary substitute car (rental cars).

Tort Liability- A. Elements of Negligence 4. casual link between negligence and damage example

a proximate cause is a cause unbroken by any new and independent cause, which produces an event that otherwise would not have occurred. That is, there must be an unbroken chain of events between the negligent act and the injury or harm that occurs example: a drunk driver who runs a red light and kills another driver would meet this requirement

Approaches for compensating auto accident victims c. unsatisfied judgement funds

a state fund for compensating auto accident victims who have exhausted all other means of recovery. The victim must obtain a judgement against a negligent motorist and must show that judgement cannot be collected. The max amount is limited by state limit and is reduced by any workers comp benefits paid. The negligent driver must pay back the state or loose their drivers license.

Legal Wrongs What are two types of legal wrongs?

a violation of a person's legal rights, or a failure to perform a legal duty owed to a certain person, to a business organization, or to society as a whole. There are 2 Types: civil wrongs criminal wrongs

Under PAP: "your covered auto"

a. any vehicle shown in the declarations page of your policy is a coverage auto b. a newly acquired private passenger auto, pickup, or van is a covered auto if it is acquired by the named insured during the policy period. -Coverage begins automatically the date you become the owner. If the coverages on all listed vehicles are not the same, you receive the broadest coverage provided for any vehicle shown in declarations. -If the vehicle you acquire is an additional vehicle you are automatically covered for 14 days, but you must notify the insurer within 14 days after you become the owner for coverage to apply. -If the vehicle you acquire is a replacement vehicle (vehicle that replaces one shown in declarations), you are automatically covered until the policy expires, you are not requirement to notify the insurer -If the declarations page indicated that collision coverage applies to at least one auto, the newly acquired auto is automatically covered on the date of ownership, but you must notify the insurer within 14 days after you coerce the owner for collision coverage to continue. -if the declarations page does not indicate collision coverage for at least one auto, a newly acquired auto is automatically insured for collision coverage for only 4 days. You must notify the insurer within 4 days after you become the owner for coverage to continue. c. temporary substitute vehicle: It is also a covered auto. a non-owned auto or trailer that you are temporarily using become of mechanical breakdown, repair, servicing, loss, or destruction of covered vehicle.

Part C: Uninsured Motorists (UM) Coverage- Insuring agreement

a. bodily injuries: The insurer agrees to pay the insured compensatory damages if the accident caused bodily injury and the owner/operator of the vehicle is uninsured. Damages include: medical bills, lost wages, and compensation for a permanent disfigurement resulting from the accident. Points to emphasize: -the coverage applies only if the uninsured motorist is legally liable -the insurer's maximum limit of liability for any single accident is the amount shown in the declarations page -the claim is subject to arbitration if the insured and insurer disagree over the amount of damages, or if the insured is entitled to receive anything b. property damage (Georgia): Some states include coverage for property damage from an uninsured motorist in their uninsured motorists law, while some offer it as an optional separate purchase. If included, the insured may have the option of waiving the coverage if not desired. Finally, the property damage is subject to a deductible.

Part D: Coverage for Damage to your auto- exclusions

a. electronic equipment issue: The PAP expands coverage of certain types of electronic equipment.They exclude coverage to loss of electronic equipment that reproduces, receives, or transmits audio, visual, or data signals. However, this exclusion does not apply to electronic equipment that is permanently installed in a covered auto or non owned auto. b. radar detection equipment: equipment for the detection or location of radar or laser is excluded. This exclusion is rationalized on the basis that radar detection equipment circumvents state and local speed laws. c. non-permissive use: Loss to a non-owned auto is not covered when it is used by the named insured of his/her family member without a reasonable belief of being entitled to do so.

Part A: liability coverage: Insured persons

a. named insured and resident family members, are insured for liability coverage. Someone related to the named insured or who resides in the same household (this includes foster kids, and kids away at college). -For separations/divorces, PAP provides coverage for 90 days to a spouse who no longer resides in the insured's household and is not listed as a named insured in the policy. If they are listed as a named insured, the will continued to be covered until the policy expires or they purchase their own policy, if earlier. b. permissive user of insured auto: Any other person using the named insured's covered auto is also insured provided that person can establish a reasonable belief that he/she is entitled to use covered auto c. Employer: coverage extends to the employer who is legally responsible for any insured's use of a covered auto on their behalf Example: If someone drives their car on an errand for employer, negligently injuries another person, and they sue their employer. The employer is covered under that persons PAP. However, coverage does not extend to the employer when that same person drives an auto owned by the employer. Their PAP does not insure the company car they are using.

examples of vicarious liability

a. parent-child: under the family purpose doctrine, the owner of an automobile can be held liable for the negligent acts committed by immediate family members when they are operating the family car b. employer-employee: this relationship may exist where the employee is actings acting on behalf of the employer. the negligent act of an employee can be imputed on the employer. (ex: if you are driving a car to deliver a package for your employee and negligently injure someone, your employer could be held liable for your actions)

Tort Reform Initiatives: 6. Use of Alternative dispute resolution (ADR)

an ADR is a technique for resolving a legal dispute without litigation. to reduce lawsuits between insurers and consumers over claims, many states now use binding arbitration or formal mediation to resolve disputes. 1. Mediation: a technique by which a neutral 3rd party tries to arrange a settlement without resorting to litigation. 2. Arbitration: a technique by which parties in a dispute agree to be bound by the decision of an independent 3rd party.

Part D: Coverage for Damage to your auto- Insuring agreement b. loss other than collision (comprehensive) coverage Why is it important to distinguish these two coverages?

applies to losses to the covered auto not caused by a collision or in cases in which an exclusion applies (such as falling objects, hitting a deer, fire, theft, hail, windstorm). It is important to distinguish these two coverages because some car owners don't want to pay for collision coverage and other-than-collision coverage is frequently written with a lower deductible.

No-fault Auto insurance: common no-fault benefits 4. funeral expenses

are paid up to some dollar limit. In some states funeral expenses are included as part of the medical expense limit. In other states funeral expenses are a separate benefit.

No-fault Auto insurance: common no-fault benefits 3. essential services

benefits are paid for essential services expenses ordinarily performed by the injured person (housework, cooking, lawn mowing).

Part C: Uninsured Motorists Coverage- underinsured motorists coverage

can be added to the PAP. It applies when a negligent third-party driver carries liability insurance, but the limits carried are less than the insured's actual damages for bodily injury

Tort Reform Major Defects: 4. high jury awards What do critics argue? What do these cases include? What cost does higher jury awards increase? How is this cost passed on? What is the ATRA? What does the ATRA do to help this?

critics also argue that jury awards for certain types of lawsuits continue to increase. These cases include motor vehicle liability, premises liability, wrongful death, medical malpractice, and products lability. Higher jury awards and out-of-court settlements result in the need to purchase higher liability insurance limits, which increases the cost of doing business. This cost in turn is passed on to consumers through increases in the cost of goods and services. The ATRA (American Tort Reform Association) identifies some states/counties so unfair to defendants that they refer to them at "judicial hellholes." ATRA believes that judges in these areas systematically apply laws and procedures in an unfair manner, against defendants in a criminal lawsuit. The ATRA issues an annual report identifying the areas considered to be "judicial hellholes."

Tort Reform Major Defects: 3. uncertainty of legal outcomes What do critics say cause this? Who does this cause confusion for? What are critics saying that we do? What happens as a result of this uncertainty?

critics say this uncertainty comes from changing legal doctrines The result is confusion for insurers, employers, risk managers, government officials, and taxpayers. At one time injured parties had to prove that the other party was at fault to collect damages. Now, critics are emphasizing providing the injured party with compensation, regardless of the blame. Saying the ability to pay is more important than determining fault, and this burden should fall heavily on insurers, wealthy people, corporations, and others with "deep pockets." As a result of this uncertainty of legal outcomes, liability insurers end up paying tort liability claims that they did not envision paying when the liability coverage was first written.

Approaches for compensating auto accident victims: a. Financial Responsibility Laws

does not require proof of financial responsibility until after the driver has his or her first accident or until after conviction for certain offenses, such as DUI

The Personal Auto Policy (PAP) When was it drafted? How is it sold?

drafted by the Insurance Services Office (ISO) is 2005 and is widely used throughout the US. Multi-line policy (meaning it covers different exposures to risk- such as liability, uninsured motorist protection, and damage). It is sold "buffet style"

Part A: liability coverage: supplementary payments

in addition to the policy limits and a legal defense, certain supplementary payments can be paid such as: a. bail bond up to $250 b. premiums on appeal bonds and bonds to release attachments c. interest accruing after judgement d. up to $200 daily for loss of earnings other reasonable expenses.

Tort Liability C. Imputed Negligence

is a blame attributed to an individual not on the basis of his/her conduct but because of the conduct of another for which he/she becomes legally responsible. 1. Vicarious liability

Liability Areas of Concern: C. Corporate Governance

is the structure of rules, practices, and processes used to direct and manage a company. A company's board of directors is the primary force influencing corporate governance. states should develop corporate governance principles that impose character and fitness expectations on directors and officers appropriate to the size and complexity of the insurer

Tort Liability- C. Imputed Negligence Vicarious Liability

many states have some type of this law by which a motorist's negligence is imputed to the vehicle's owner (if the driver is acting as an agent for the owner of the vehicle, the owner can be held legally liable)

Approaches for compensating auto accident victims f. No-fault auto insurance

means that after an auto accident involving bodily injury, each party collects from his or her own insurer regardless of fault. It is not necessary to determine who is at fault and prove negligence before a loss payment is made. Regardless of who caused the accident, each party collects from his or her own insurer.

No-Fault Auto insurance: Nature b. Tort thresholds- monetary threshold

monetary threshold: Most no-fault laws place some restriction on the right to sue the negligent driver who caused the accident. If a bodily injury claim is below a certain monetary threshold (such as $5,000) an injured motorist is not permitted to sue but instead would collect from his or her own insurer. However, if the bodily injury claim exceeds the threshold amount, the injured person has the right to sue the negligent driver for damages.

No-fault Auto Insurance: common No-fault Benefits how are they provided? What does it describe? When/what can the injured person sue? What are the no fault benefits?

no fault benefits are provided by adding an endorsement to an auto insurance policy, typically called "personal injury protection coverage (PIP)." It describes the no-fault benefits and restricts them to the injured persons economic loss such as the ones listed below. The injured person can sue for noneconomic loss (i.e. pain and suffering) only if the dollar threshold is exceeded or the verbal threshold is met. No fault benefits: 1. Medical Expenses 2. Loss of Earnings 3. Essential services 4. funeral expenses 5. survivor loss benefits

Liability Areas of Concern: A. Medical Malpractice

occurs when a negligent act or omission by a physician or other healthcare professional results in injury or harm to the patient. 1. Hospitals, Clinics, etc.: 2. Practitioners: To determine liability, the patient must show that the doctor deviated from the generally accepted standards of practice in this particular case. The physician's negligence must cause injury to the patient.

Part D- Coverage for Damage to your Auto- limit of liability c. replacement parts issue (OEM or after market)

or a partial loss, a car can be repaired with parts manufactured by the original equipment manufacturer (OEM) or with generic auto parts. However OEM are much nicer quality, so it has caused issues with insurers saving money by using generic parts. Most states require insureds of what parts they are using, giving them the option to pay the difference in order to upgrade from generic to OEM.

No-fault Auto insurance: common no-fault benefits 5. survivor loss benefits

payable to eligible survivors, such as a surviving spouse and dependent children. The survivors typically receive periodic income payments or a lump sum to compensate them for the death of a covered person.

No-fault Auto insurance: common no-fault benefits 2. Loss of earnings

payments are made for the loss of earnings. The no-fault benefits are typically limited to a stated percentage of the disabled person's weekly or monthly earnings, with a maximum limit in terms of dollar amount and duration.

Tort Reform Initiatives: 3. Restricting Punitive Damages What were they originally intended to do? What was happening in many cases? What have states done/going to do?

punitive damages were originally intended to punish defendants for shockingly bad conduct and to deter others from engaging in the same behavior. However, in many cases, awards for punitive damages are so large that they bear little relationship to the compensatory damages awarded by the courts. More than half the states have passed laws that limit the imposition of punitive damages. Other states are considering legislation that would limit the maximum amount that could be paid for punitive damages or restrict the imposition of punitive damages to certain types of cases.

No-Fault Auto Insurance: Nature a. First party coverage

refers to a compensation received under one's own insurance policy as opposed to receiving payment from someone else's insurance policy.

Approaches for compensating auto accident victims: b. Compulsory Insurance Laws advantages and disadvantages

requires motorists to carry at least a minimum amount of liability insurance before the vehicle can be licensed or registered advantages: provide greater protection than financial responsibility laws because motorists must provide evidence of financial responsibility before an accident occurs. disadvantages: There is no correlation between compulsory insurance laws and the number of uninsured vehicles on the highway. Although lower-income drivers support a liability insurance requirement, many simply cannot afford the coverage.

Approaches for compensating auto accident victims e. "No pay, no play" laws

restrict uninsured motorists from suing negligent drivers for noneconomic damages, such as compensation for pain and suffering. Some states are considering the proposal as a method for reducing the number of uninsured drivers.

Auto Insurance for High-Risk Drivers

some drivers have difficulty obtaining auto insurance through normal market channels. This group includes younger drivers who account for a disproportionate number of auto accidents, drivers with poor driving records, and drivers with one of more conditions for drunk driving. 1. Auto Insurance Plans (assigned risk plans) 2. Join Underwriting Association (JUA) 3. Reinsurance Family (or pool) 4. Maryland Fund 5. Specialty Insurers

Tort Reform Initiatives: 1. Caps on Noneconomic damages

such as pain and suffering. Many states have enacted legislation that places a maximum limit on noneconomic damages. Reform measures may include all tort suits or only specific suits, such as medical malpractice

Part E: Duties after an accident or loss- Notification b. insurer/agent

the PAP states that the insurer has no duty to provide coverage if you fail to comply with certain listed duties (only if they harm the insurer). You are required to notify your insurance company or agent promptly after the accident. Failure to do this could jeopardize your coverage if you are later sued by the other driver. You must cooperate with your insurer in the investigation and settlement of a claim.

Part A liability Coverage: Insuring agreement

the insurer agrees to pay any damages for bodily injury or property damage for which any insured is legally responsible because of an auto accident.

Tort Reform Major Defects: 5. long delays in settling lawsuits How does this affect cases? What is a growing problem? Where is a considerable amount of time spent? What is the result of this?

the tort system is also marred with long delays in settling lawsuits. cases take months of years to settle. A growing problem is the backlog of civil trails in federal courts. The backlog is blamed on not increasing the number of federal judges to reflect population changes, more suits being filed by federal prisoners, and lack of congressional action to fill vacancies. A considerable amount of time is spent in pretrial examining the facts (interviews, depositions, and requests for documents). Repeated requests for documents can be time consuming and expensive during the discovery stage of a suit. Attorneys frequently use delaying tactics during the discovery stage as an economic weapon against opponents. The result is substantial increase in delay and cost.

Tort Reform Initiatives: 2. Reinstating the State-of-the-Art Defense

this proposal has relevance with respect to products liability suits. If the product conformed to the prevailing state of technology or industry and government standards at the time the product was manufactured, it would not be considered a defective product today.

Tort Liability- A. Elements of Negligence 1. Existence of a legal duty example

to protect others from harm. example: a motorist has a legal duty to drive safely and stop at red lights. If there is no legal duty imposed by law, you can not be held liable

Part B: Medical Payments Coverage- insured persons

two groups are insured for medical payments coverage: 1. named insured and family members: They are covered if they are injured while occupying a motor vehicle or are injured as pedestrians when struck by a motor vehicle designed for use mainly on public roads 2. other persons while occupying a covered auto: for example, if you own your can and are the named insured, all passengers in your car are covered for their medical expenses under your policy. However if you are operating a vehicle you don't own, they are not covered unless they are family members.

Tort Reform Initiatives: 4. Modifying the Collateral Source Rule What is the collateral source rule? What is an example of this? How would this rule be modified? What have state's done in response?

under the collateral source rule the defendant cannot introduce any evidence that shows the injured party has received compensation from other collateral sources. EXAMPLE: a delivery driver that is injured in rear-end collision may be able to collect expenses from the negligent driver. However, job-related medical expenses are also covered under a state's workers compensation law. Therefore the injured driver might "double dip" and receive a total amount that exceed the medical bills. The collateral source rule would be modified so that the recovery from other sources could be considered in determining the amount of damages. About 1/3 of states have enacted laws to alter this rule.

No-fault Auto insurance: common no-fault benefits 1. Medical Expenses

usually are paid up to some maximum limit. Rehabilitation expenses incurred by an injured accident victim are also paid.

No-Fault Auto insurance: Nature b. Tort thresholds- verbal threshold

verbal threshold: means that a suit for damages is allowed only in serious cases, such as those involving death, dismemberment, disfigurement, or permanent loss of a bodily member or function. Thus, if the injured person has a less-severe injury than those mentioned, the injured person would not be permitted to sue but would collect only from his/her insurer.