CPCU 500 2

Automobile Liability

- Legal responsibility for bodily injury or property damage arising out of the ownership, maintenance, or use of automobiles - Under the common law, ownership of an auto does not automatically make the owner liable for injury or damage caused by someone else's negligent operation of the vehicle. - Anyone who is injured or whose property is damaged as a result of the negligent use of an auto has a right of action against the operator.

Employment Practices Liability (EPL) Risks

1. These are the major types of EPL risks organizations can face: a. Discrimination b. Wrongful termination c. Sexual harassment d. Retaliation

Completed operations

Completed operations liability is the legal responsibility of a contractor or another entity for bodily injury or property damage arising out of the entity's completed work.

Natural Risk Sources

Everyone has a property loss exposure involve events beyond human control; fire, flood, disease, etc.

Noninsurance Transfers for Risk Control

Leases Contracting for services Disclaimer of warranties Waiver or exculpatory clauses

Strict Liability

Liability imposed by a court or by a statute in the absence of fault when harm results from activities or conditions that are extremely dangerous, unnatural, ultrahazardous, extraordinary, abnormal, or inappropriate.

Personal Liability Loss Exposures

Liability loss typically results from the breach of a legal duty involving the ownership or use of property, as well as from contractual agreements (contractual liability) and statutory or regulatory requirements (statutory liability).

compulsory auto insurance laws

Make it illegal to operate a vehicle without certain kinds of auto insurance.

Human Resource Risk

Organizations can be held liable for the conditions or environmental and operational factors that caused illness

Operational Risks

People, Process, System, External Events

Products operations

Products liability arises out of the manufacture, distribution, or sale of an unsafe, dangerous, or defective product and the failure of the manufacturer, distributor, or retailer to meet its legal duties to the user or consumer of the product.

Insurable Risks and Loss Exposures

Some risks are uninsurable...these include: a. It's associated with purebrisk. b. It's accidental from the insured's standpoint. c. It's definite and measurable. d. It's one of a large number of similar exposure units. e. It's not catastrophic for the insurer. f. It's economically feasible to insure

Tort Law

The branch of civil law that deals with civil wrongs other than breaches of contract

Negligence

The failure to exercise the standard of care that a reasonable person would exercise in similar circumstances.

Directors and Officers (D&O) Liability Risks

The fiduciary relationship is the most important aspect of the corporation when it comes to analyzing the D&O liability risk exposures.

Exception to leases

The lease obligates the lessee to return the property to the lessor in the same condition in which it was received. The lessee is at fault in causing harm to others

indemnitee

The party that uses a hold-harmless agreement to transfer the financial consequences of loss to a second party

guaranteed cost insurance

The premium is specified when the policy takes effect.

Exception to court exemption rule

The principal is directly liable for negligence in selecting the contractor, giving directions, or failing to stop any unnecessary dangerous practices of which the principal was aware. The principal's responsibility for certain duties to be performed safely cannot be delegated to another party. If the subcontracted work is inherently dangerous to others, the principal that hired the contractor can be held liable for a third-party injury caused by the contractor's negligence.

Personal Vehicle Coverage

The tort liability system, which is based on fault, is the traditional and most commonly used method of seeking compensation for injured auto accident victims. Most states have enacted compulsory auto insurance laws.

Claims covered under employers liability insurance

Third-party claim, or third-party-over action b. Claim for care and loss of services, or loss of consortium c. Dual-capacity claim

Coinsurance

This provision requires an insured to carry a certain amount of coverage relative to the insurable value of the insured property, often 80 percent.

Contracting for services/Sub contracting

Transfer this loss exposure by contracting with other organizations to perform each activity. Liability loss exposures not easily transferred

Products and Completed Operations

Usually treated as one loss exposure, many liability lawsuits based on strict liability in tort

What rule does the court restrict in Subcontracting

exempting the person who hires an independent contractor from liability for the independent contractor's torts.

What does Insurance share

sharing the cost of losses. The insurer pools premiums paid by its insureds and pays insureds who experience covered losses from the pooled funds

indemnitor

the second party, which agrees to indemnify the indemnitee

Process risk

typically includes the procedures and practices organizations use to conduct their business activities, framework key to maintaining plan

subrogation,

which enables them to recover a significant portion of the money they pay out in claims and reduce premiums

Civil Law

A classification of law that applies to legal matters not governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others.

Hold Harmless Agreement

A contractual agreement that transfers the liability of one party to another party; it is used by landlords, contractors, and others as a way to avoid or reduce risk.

Disclaimers of warranties

A disclaimer in a sales contract may deny any express warranties made during the sale of a property. It may also deny implied warranties, such as the implied warranty of fitness for a particular purpose and the implied warranty of merchantability.

Deductible

A portion of a covered loss for which the insured is responsible, on claim payments to help keep premiums down, reduce the administrative expense of handling many low-value claims, and incentivize insureds to prevent losses from occurring

intentional tort

A tort committed by a person who foresees (or should be able to foresee) that his or her act will harm another person.

The Insurer's Rights Under a Policy

Actions can trigger a waiver of those rights or result in an insurer being estopped from asserting its rights For estoppel to occur, the insured must suffer harm from relying on the insurer's conduct, thereby: a. Incurring additional expenses b. Receiving instruction contrary to policy conditions c. Disposing of damaged property

Homeowners Coverages

Although homeowners forms can vary slightly, they generally provide the same coverages, just to differing degrees Many endorsements are available to modify HO policies so that they best meet the needs of individuals and families

Workers Compensation and Employers Liability

An employer's responsibility to pay claims under the various state and federal workers compensation statutes is a common example of liability imposed by statute. b. The typical workers compensation statute is intended to provide an "exclusive remedy" for occupational injury or illness to all employees subject to the law

Waiver or Exculpatory Clause

An individual or organization can relinquish its right to sue another party through either a waiver or an exculpatory clause Can transfer responsibility for liability loss exposures.

Leases

Certain losses that can arise from property ownership do not exist for a lessee occupying the property. These losses include accidental damage to the property and liability to third parties resulting from hazards on the property

Hold-harmless agreements can be classified according to the extent of responsibility they transfer:

a. Limited form b. Intermediate form c. Broad form

three types of no-fault plans:

a. Modified no-fault plans b. Add-on plans c. Choice no-fault plans

No-fault laws

authorize or mandate the use of personal injury protection coverage and define the benefits that insurers can or must provide in those states.

Commercial general liability insurance encompasses three main coverages:

bodily injury and property damage liability, personal and advertising injury liability, and medical payments.

Three basic coverage combinations are available for crime loss exposures:

commercial crime, government crime, and employee theft and forgery.

Systems risk

concerns the function of technology, its intentional or accidental failure, and security.

Ability to Meet Risk Financing Goals

consider the extent to which the insurance meets the organization's risk financing goals, effective in maintaining solvency/protecting from large losses, less effective in retaining the risk

Employers liability insurance

covers an employer against liability for an employee's occupational injury or disease that is not covered by a workers compensation statute.

Human Risk Source

deliberate acts of individuals or groups, as well as events that are not deliberate but involve some element of human intervention

External events

don't involve natural occurrences include the temporary or permanent loss of a key supplier or the loss of a key customer

Fiduciary

duties are a common source of risk for directors and officers. They include: a. Duty of care b. Duty of loyalty c. Duty of disclosure d. Duty of obedience

Insurance as a Risk Management Technique

enables an organization to transfer some of the potential financial consequences of its loss exposures to an insurer through a legal contract

Premises and Operations Liability

liability arising from from bodily injury or property damage caused either by an accident on an organization's owned, leased, or rented premises or by an accident that arises from the organization's ongoing (as opposed to completed) operations but occurs away from the premises.

Commercial Liability Loss Exposures

loss exposures are potential losses that can occur when an organization is held legally liable to another individual or organization for injury or damage.

People Risk

not all of the consequences of these risks are, errors lead to signifcant costs,

Inland Marine Insurance

primarily those that involve some element of transportation. These coverages are available for property in transit: a. An annual transit policy covers all shipments made or received by the insured throughout a one-year policy period. b. A trip transit policy covers cargo on a specified trip, such as machinery being moved from a manufacturer to a business. c. A motor truck cargo liability policy covers a trucker's liability for damage to cargo of others being transported by the trucker.