Basics of Casualty Insurance

Bob has a liability policy in the amount of 300/500/100. How much coverage does he have per occurrence for property damage liability?

$100,000 The limits of liability in an insurance policy may be expressed as a split limit. In the example 300/500/100 indicated that bob has 300,000 per person and 500,000 per occurrence for bodily injury liability and 100,000 per occurrence for property damage liability. Limits of liability may also be expressed a s a combined single limit; for example 300,000 per occurrence for bodily injury property damage or both combined

An insured owns a pet lion that is caged on the homeowners property. The owner takes great care to warn neighbors of the possible danger by posting signs, fencing the yard, and locking the cage at all times. When a neighbors child manages to open the cage and is bitten what type of liability would apply to the lion owner

Absolute liability The law imposes strict or absolute liability for specific situations or activities that pose threats to the safety of others. People who own dangerous animals are held to a higher standard of care. Absolute liability applies when a person is liable for a dangerous condition, regardless of the amount of care taken

Payments for losses that cannot be precisely measured, such as the loss of companionship of spouse from another, are called ____.

General damages General damages which are payable in additional to special damages are payments for non economic losses or losses that are not normally directly measurable General damages include pain and suffering mental anguish and loss of companionship damages are awarded for out-of-pocket or economic losses because medical cost loss of income or damage to property when the court switch to send a message or punish the defendant for prohibited conduct punitive damages may be ordered a defendant is usually awarded only when the harm has been caused by gross negligence or malicious intent

Which one of the following would be classified as general damage

Pain and suffering Compensatory damages compensate an injured party for injuries sustained nothing more the purpose is to make a person whole again in the position that existed before the lost or compensatory damages are further categorized by General damages which necessarily result from the act or Omission such as emotional distress inconvenience and suffering and special damages loss is my very in exact sounds of money including medical bills travel expenses for medical care prescription cause damage property and lost wages

All of the following coverages are typically included in the supplementary payments of a liability policy except

Property damages the insured is found legally liable for Property damages the insured is found to be legally liable for are covered under the applicable liability section of the liability policy. Supplementary payments are paid in addition to the policy limit of liability and include items such as the expenses the insurance company incurs (defense costs claim investigation expenses interest on judgments and other court related costs) premiums for certain types of bonds (bail, appeal, and release of attachment bonds) first aid to other at the time of the accident and reasonable expenses the insured incurs (including loss of earnings)

What is meant by the aggregate limit of liability

The maximum amount the policy will pay per policy period regardless of the number of claims. an aggregate limit is a type of policy limit found in liability insurance policies that limits coverage to a specified total amount for all losses occurring within the policy period.

Which one of the following principles is used to describe liability for the actions of another person

Vicarious liability Vicarious liability describes insurance extended to anyone who is liable because of the negligence of a person. For example general contractors many times have vicarious liability for the negligent acts of a subcontractor and parents do for their underage children

An employee is delivering packages for her employer but is using her own vehicle. The employee hits a pedestrian. The employer may be held liable because of the doctrine of

Vicarious liability Vicarious liability means that one person is liable for the negligent behaving of another such as an employer being liable for the actions of its employee

All of the following factors must be involved to establish negligence EXCEPT approximate cause damages breach of legal duty owed legal duty owed

approximate cause To establish negligence the 4 factors that must be involved are legal duty owed breach of legal duty owed proximate cause and damages

a person becomes seriously ill after eating unrefrigerated raw oysters from a street vends. When the vendor is sued for negligence what defense might best be used.

assumption of risk Most reasonable people would know the potential danger of eating raw seafood. Therefore it is likely that the vendor would use an assumption of risk defense. Other defenses against negligence are 1) assumption of risk- the unjust person knew the dangers involved in the act that resulted in the injury 2) contributory negligence - the injured party is shown to be negligent in some way in not avoiding harm 3) comparative negligence - each party is shown to have been negligent to some degree and 4) the last clear chance - a plaintiff is not barred from recovery if the defendant had an opportunity to avoid an accident but failed to do so.

Jordan is attending the NBA playoffs and has front row seats. One of the players attempts to make a basket and the ball bounces off the court hitting jordan in the face. The defense that will most probably used is

assumption of risk assumption of risk applies when a person knowing exposes himself to danger or injury. By assuming this risk the person may not be able to recover damages from the negligent party

The insured is in a hurry to get to work, fails to stop at a stop sign, speeds through an intersection, and strikes another vehicle. That vehicle hits another car that then jumps a curb and injures a pedestrian. What is the proximate cause of the accident? A) Failing to avoid an accident. B) Leaving late for work. C) Failing to stop at a stop sign. D) Speeding.

failing to stop at a stop sign In property and casualty insurance proximate cause is the effective reason for loss or damage. It involves an unbroken chain of cause and effect between the occurrence of an insured peril or a negligent act and resulting injury or damage. the proximate cause of this loss (failure to stop) sets in a motion an unbroken chain of events that leads to several losses (property and physical damage)

All of the following are exclusions under a liability policy EXCEPT injuries or damages caused by unintentionally by the insured bodily injury to an employee losses covered by workers compensation laws bodily injury to the insured

injuries or damages caused unintentionally by the insured Injuries or damages that are unintentional on the part of an insured are covered. that is one of the primary purposes of a liability policy - to pay for covered third party losses.

Common exclusions with a liability policy would typically include all of the following except injuries or damages caused by intentionally by the insure injuries or damages caused by unintentionally by the insured damage to property in the insureds care custody or control damage to property owned by the insured

injuries or damages caused unintentionally by the insured The purpose of liability insurance is to protect the insured against financial loss in the even that he becomes legally obligated to pay the actual damages caused to others and coverage for injuries or damages caused unintentionally by the insured is included. There are certain items however that are excluded. Common exclusions typically include items such as damage to the insureds property bodily injury to the insured damage to the property in the insures care custody and control and injuries or damages caused intentionally by the insured

An occurrence is best described as something that: A) is expected. B) is intentional. C) happens when no one is present. D) may take place over time.

may take place over time An occurrence can refer to an accident or to continuous or repeated exposure to the same conditions, resulting in injury to persons or damage to property that is neither expected nor intended.

An insured speeds through a residential neighborhood, almost striking several children. Under the insurance definition of negligence, such an insured would be held: A) negligent. B) strictly liable. C) not legally liable. D) legally liable.

no legally liable A person may be held liable for negligent acts if each of the following 4 elements is present 1) legal duty to act (or refrain from actin); 2) failure to perform that duty (breach of duty); 3) injury or damage occurs; and 4) the breach of duty cause the unjust or accident. Although the driver was reckless, no injustice or damage occurred and a person usually is not held legally liable unless all 4 of these elements are present

An insured owns a small neighborhood grocery store. During a storm a piece of the roof falls on the sidewalk. Several people are in the store at the time but no one is injured. Under the insurance definition of negligence such and insured would be held.

not legally liable. A person may be held liable for negligent acts if each of the following 4 elements is present 1) legal duty to act (or refrain from actin); 2) failure to perform that duty (breach of duty); 3) injury or damage occurs; and 4) the breach of duty cause the unjust or accident. Although the driver was reckless, no injustice or damage occurred and a person usually is not held legally liable unless all 4 of these elements are present

Liability policies provide certain supplementary payments that are

paid in addition to the policy regular limit of liability Liability policies include supplementary payments that provide coverage in addition to the insured's limit of liability. The insured does not need to be found legally liable for these coverage to apply.

Liability insurance covers

third party losses Liability losses are also known as third party losses. This is because the insured is considered the first party and the insurance company that legally represents or defends the insured is the second party. The third party is the person or persons who suffer injury or damage because of the actions of the first party, the insured.

Which of the following events is not considered an occurrence for insurance purposes slipping and falling on icy pavement long term exposure to chemicals being struck by a falling object wearing out clothing

wearing out clothing An occurrence is an accident as well as continuous or repeated exposure to the conditions that result in injury to persons or damage to property. The insured neither expects it nor intends it. Under the situations listed only the wearing out of clothing is not an occurrence. By wearing the clothes a person gradually damages or destroys them resulting in a decline in their value. However for insurance purposes this is not a loss because it is the expected or intended consequence of wearing the clothes