ch 1 p&c
Vicarious Liability
"reaspondent superior" -transfer liability to another person who has greater liability to pay. ex) employers liable for their employees parents liable for acts of children.
special damages
(compensatory damages) that awards a sum of money for specific, identifiable out-of-pocket expenses associated with the injured person's loss, such as *medical expenses or lost wages*.
Which is the broader definition of loss & why? Accident or occurance
*OCCURANCE* includes losses caused by repeated/continuous exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected? You can not pin down the moment loss occured & can be due to many factors
In absolute liability os proof of fault or negligence needed to hold a person/company liable?
*no proof* of fault or negligence is needed to hold a person or company liable.*
Strict Liability
-*product liability* cases -manufacturers of a product make an implied warranty that the product is safe. -business is liable for defective products -if product causes injury to a consumer, manufacturer is strictly liable
What type of liability would be owning a swimming pool? -absolute liability -vicarious liability -strict liability
-absolute liability
What type of liability would be selling explosives? -absolute liability -vicarious liability -strict liability
-absolute liability
What type of liability: a person or company engaged in a hazardous business who, by reason of negligence or an act or omission, causes harm or injury to another person or property. Because of the nature of this type of liability, *no proof of fault or negligence is needed to hold a person or company liable.* -absolute liability -vicarious liability -strict liability
-absolute liability
Replacement Cost (loss valuation)
-cost to replace damaged property with todays price without any deduction or depreciation. -contradicts indemnity bc it may provide insured w/ a settlement in excess of property actual cash value
Actual Cash value (loss valuation)
-follows principal of indemnity -recognizes the reduction of value of a property as it becomes subject to wear and tear. Current Replacement Cost- Depreciation=Actual Cash Value
general damages
-highly subjective and is determined by how much the judge/jury feels is right.
Fair credit reporting act -who is it administered by? -what will happen to an individual who knowingly and willfully violates this act? -what will happen to an individual who unknowingly violates this act?
-protects consumers from the circulation of inaccurate obsolete personal financial information -Federal trade commision -willingly/knowingly= up to 2 years in jail & up to $2,500 penalty -unknowingly= liable to pay amount equal to the loss & any legal fees incurred through the process to the consumer
Transfers Liability to another person who has greater liability to pay. "reaspondent superior" -absolute liability -vicarious liability -strict liability
-vicarious liability
what kind of liability does an employer have on an employee? Parent on child? -absolute liability -vicarious liability -strict liability
-vicarious liability
pure risk
A chance of loss or no loss, but no chance of gain. insurable
Speculative Risk
A chance of loss, no loss, or gain. not covered by insurance
Specific Insurance
A property insurance policy that covers a specific kind or unit of property for a specific amount of insurance.
Blanket Insurance
A single property insurance policy that provides coverage for multiple classes of property at one location, or provides coverage for one or more classes of property at multiple locations. written for one total amount, no one single item is assigned specific insurance amount.
a sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage that is neither expected nor intended.
Accident
-recognizes the reduction of value of a property as it becomes subject to wear and tear. (loss valuation)
Actual Cash Value
What loss valuation method follows the principal of indemnity?
Actual Cash Value
The maximum limit of coverage available under a liability policy during a policy year. once insured reaches that limit they will not pay out anymore until the anniverseery of the policy
Aggregate Limit
Loss valuation that works best for items that have value that does not fluctuate much
Agreed value
What loss valuation is described: "you and your insurer agree on the value of your car, which is the max amount the insurer will play in event of covered lost.
Agreed value
Amount that insured and insure agree that an item is worth at the time of policy issue. Works best for items w/ value that does not fluctuate much (loss valuation)
Agreed value.
If an insureds building catches fire. when fire dept applies water to put out fire the wall/ floor sufer water damage. Water damage is not insured..... will it be covered?
Although water damage is not an insured peril, the damage is paid under the peril of fire bc fire was a proximite cause.
Agreed Value (loss valuation)
Amount that insured and insure agree that an item is worth at the time of policy issue. Works best for items with value that does not fluctuate much. When loss occurs the policy pays the agreed value specified regardless of depreciation or appreaciation.
Morale Hazards
Arise from a state of mind that causes indifference to loss, such as carelessness ex) not fixing car because if it gets worse insurance will cover it.
Peril
Cause of loss
Hazards -what are the types?
Conditions or situations that increase the chance of loss occuring -physical hazard -moral Hazard -Morale Hazard
What is the only type of loss that property insurance covers? -inderect loss or direct loss?
DIRECT loss -however since the inderect loss is related to the direct loss, inderect losses are typically added to insurance polocies.
Direct, physical damage to buildings and/or personal property.
Direct loss
Direct loss
Direct, physical damage to buildings and/or personal property. *includes proxomite cause of loss* (ex. insureds building catches fire. fire dept applies water. wall and floors then suffer water damage. Although water damageis not an insured peril, the damage is paid under the peril of fire bc fire was the proxomite cause
Loss Valuation
Factor in determining the premium charged & the amount of insurance required. 1. Actual Cash Value 2. Replacement cost 3. Market Value 4. Stated & agreed amount 5. Salvage Value
who administers the fair credit reporting act?
Federal trade commision
What are the typical perils insured against in property insurance policies?
Fire wind hail explosions
What type of compensatory damages will pay for pain and suffering and disfigurement?
General damages
Conditions or situations that increase the chance of loss occuring
Hazards
in event of loss, insured can only collect the extent of the loss & is *not allowed to gain financially*
Indemnity
the insurers liability for payment as stated in an insurance policy
Limits of liability
What loss valuation takes into account land & location in addition to just the property itself.
Market Value
values loss based on the amount a willing buyer would pay seller for property prior to a loss. Takes into account land and location. (loss valuation)
Market Value
Stated amount
Maximum amount an insurer will pay in event of a loss -not subject to any coinsurance requirements
Applying makeup while driving -Moral or morale hazard?
Morale Hazard
includes losses caused by repeated/continuous exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected?
Occurance (broader definition of loss since you can not pin point the exact moment loss occured)
max amount avail for payment of bodily injury to a single person in an acciden
Per Person
A tort may result in what two forms of injury to each other.
Property damage and bodily injury
What type of risk is insurable?
Pure risk
-cost to replace damaged property with todays price without any deduction or depreciation. -contradicts indemnity (loss valuation)
Replacement cost
What loss valuation method contradicts indemnity bc it may provide insured w/ a settlement in excess of property actual cash value
Replacement cost
What is the formula for Actual Cash Value
Replacement cost - depreciation=actual cash value
Uncertainty of chance of loss occuring
Risk
value of an asset at the end of its life. property may be sold in whole or part. (loss valuation)
Salvage Value
What type of compensatory damages will pay for out-of-pocket expenses such as medical expenses or lost wages?
Specific expenses.
What Liability is found in product liability cases? -Absolute Liability -Vicarious Liability -Strict Liability
Strict Liability
If product causes injury to a consumer, manufacturer is _______________ liable
Strictly Liable
insurers legal right to seek damage from 3rd parties, after it has reimbursed for the loss. -prevents insured from collecting twice
Subrogation
Aggregate Limit
The maximum amount an insurer will pay for all covered losses during the covered policy period. after this amount is reached. The insurer will not pay out anymore claims regardless of claims.
In P&c when must insurable interest exist?
Time of loss
Risk: what are the two types:
Uncertainty of *chance of loss*occuring Speculative Risk Pure Risk
no people have been living or working within the required period of time, but some property is stored. ex) insured goes on vacation for 2 weeks
Unoccupancy (nonoccupancy)
what will happen to an individual who *knowingly and willfully* violates the Fair credit Reporting act?
Up to 2 years in jail and fined up to $2,500
Structure where no people have been living or working and no property has been stored for the period of time stated on policy. ex) If insured moved
VACANCY
Absolute Liability
a person or company engaged in a hazardous business who, by reason of negligence or an act or omission, causes harm or injury to another person or property. Because of the nature of this type of liability, *no proof of fault or negligence is needed to hold a person or company liable.* ex) owning swimming pool, harbouring wild animals, selling explosives
Physical Hazard
a physical condition that increases the frequency or severity of loss
Moral Hazard
applicants may lie on an application for insurance or have submitted fraudulent claims against the insurer.
What is another term for Inderect loss
consequential
what are the two types of losses
direct & inderect.
proximate cause of loss
direct cause of loss
What would the direct & inderect loss (consequential) be in this scenario? A business Burns down and experiences loss of profits due to being closed.
direct:business burns down inderect: loss of profits
Mysterious Disappearance -are they typically excluded or included on insurance policies
disappearance of property w/out knowledge to where, when or how, the property was lost. Typically, excluded from most insurance policies
Certificate of insurance
evidence showing that insurance policy has been issued. indicates amounts & types of insurance provided. ex) a construction site may want to see a contractors certificate of insurance to insure that they are covered.
punitive damage
form of punishment for extreme outrageous behavior, gross negligence or willful intent
What are the two classes Compensatory Damages?
general damages and specific damages
indemnity
in event of loss, insured can only collect the extent of the loss & is *not allowed to gain financially*
*Open Peril* Policy
insurance company will cover you for anything that happens to your stuff, unless it's specifically excluded from your policy. covers ALL PERILS (named or not) unless specifically excluded)
Insurable Interest -who can have insurable interest? 3 elements? -when must insurable interest exist?
insured incurs financial loss if property was damaged. ex) mortgagees and leaseholders may have insurable interest 1.Financial (monetary interest) 2. Blood (relative 3. Business partner MUST EXIST AT TIME OF LOSS
Subrogration
insurers legal right to seek damage from 3rd parties, after it has reimbursed for the loss. Based on indemnity preventing insured from collecting twice (once from insurer and once from party that caused damage) ex) car crash not Caitys fault. Caitys insurance pays her for the loss. Caitys insurance checks with the insurance company of the indivisual that was at fault to ensure that they do not pay out the loss as well.
what will happen to an individual who *unknowingly* violates the Fair credit Reporting act?
liable to pay the amount equal to the loss & any incurred attorney fees to the consumer.
property damage
loss is simple to determine --measured by actual monetary loss the injured party suffered, which is measured by the value of property damaged/destroyed and the loss of use of that asset
What does Casualty insurance insure against?
loss or damage of property & resulting liabilities
indirect losses (consequential losses)
losses considered a result of direct loss. *usually result from the time it takes to repair or replace damaged property.* ex) if family house burnt down the extra living expense would be the inderect loss ex) if business floods, the loss of profits due to the business having to close would be the inderect loss.
per person
max amount avail for payment of bodily injury to a single person in an accident (regardless of the policy limit stated in the policy for bodily injury claims)
provides coverage for the perils listed on the policy and ONLY those perils. No coverage provided for unlisted perils Named or open peril policy?
named peril
insurance company will cover you for anything that happens to your stuff, unless it's specifically excluded from your policy. covers ALL PERILS (named or not) unless specifically excluded)
open peril
the maximum amount that can or will be paid by an insurer in the event of any single accident/occurrence
per occurence
Cause of loss
peril
specific cause of loss
peril
What type of damage is measured by actual monetary loss the injured party suffered, which is measured by the value of property damaged/destroyed and the loss of use of that asset
property damage
*Named Peril* policy
provides coverage for the perils listed on the policy and ONLY thos perils. No coverage provided for unlisted perils
What type of compensatory damages punishes extreme behavior, gross negligance, or willful intent
punitive damage
the amounts of insurance for bodily injury liability and property damage liability are *stated separately.*
split limits
what is the term for the following example: 25/50/25 would indicate that the policy would pay up to $25k for injury of single person/ up to $50k for bodily injury of 2 or more ppl/ up to $25k for damage of property of others
split limits
Split Limits
the amounts of insurance for bodily injury liability and property damage liability are stated separately. used in many *auto policies* ex) 25/50/25 would indicate that the policy would pay up to $25k for injury of sngle person/ up to $50k for bodily injury of 2 or more ppl/ up to $25k for damage of property of others
Limits of liability
the insurers liability for payment as stated in an insurance policy
What does Property insurance insure against?
the loss of physical property or loss of income producing abilities
per occurance
the maximum amount that can or will be paid by an insurer in the event of any single accident/occurrence
Salvage Value (loss valuation)
value of an asset at the end of its life. property may be sold in whole or part. ex) car may be beyond repair as a complete automobile but some of its parts may be able to be sold.
Market Value (loss valuation)
values loss based on the amount a willing buyer would pay seller for property prior to a loss. takes into account land/location rather just property itself.
what liability is "respondent superior" -Absolute -strict -vicarious
vicarious liability
