RMIN 5100S - Test 3 (Atkinson)

Intentional (a type of tort)

- 2 Types: 1. Act - intends to do the action, but no intent to harm (You run a red light and hit a car). 2. Injury - Purpose is to cause harm (assault, battery, invasion)

Compensatory Damages

- A monetary award paid to the wronged party - there are two types: 1. Special: medical expenses, loss of income, etc. Can be quantified 2. General: mental anguish, pain and suffering. Cannot be quantified

CGL Coverage A

- Bodily Injury (BI) and Property Damage (PD) as a result from premises and operations or products and completed operations

What damages will the CGL pay?

- Compensatory damages? All of them. One the policy is triggered by BI/PD, the CGL policy will pay all compensatory damages that insured is legally obligated to pay. - Pain and suffering? Yes, this is a part of the General Compensatory damages, but it must be triggered by BI/PD. If the insured is legally obligated to pay them, the CGL will cover pain and suffering. - Punitive Damages? No! Punitive damages are not coverable by the policy in most states. The insurance policy does not say anything about punitive damages, it is silent. It is statutes that decide. It would not be a punishment to the insured if the policy paid for them.

Types of Damage Awards

- Compensatory: used to compensate the wronged party; Two types: Special (can be quantified) and General (cannot be quantified) - Punitive: used to punish the wrongdoer (usually pretty rare). CGL DOES NOT PAY!!

CGL Main Coverages

- Coverage A - Coverage B - Coverage C

Legal Liability

- Criminal: crimes against society. Punishable by imprisonment and fines - Civil: breach of duty owed to others. Punishable by money and injunctions. - A single act can be both: 2008-09 Salmonella Outbreak. Major recall in 46 states of products that were contaminated with salmonella (especially Peanut Butter paste). The company was continuing to sell the products even after bad tests. The CEO was sentenced to 28 years in prison.

Fashion, Inc. is a clothing design factory with 1,000 employees and a fleet of 200 cars and delivery trucks. Fashion, Inc. owns the building where they manufacture the clothes and also have a sales floor. They have the following Insurance Policies. All of the policies are for the period of 1/1/2019 to 1/1/2020: Commercial General Liability (Occ. Basis): $1m per occurrence GL, $2m aggregate $1m per occurrence Products/CO, $1m aggregate $1m per occurrence - Per occurrence Personal and Adv. Injury $5,000 Medical Expenses per person $0 Deductible A fire at the store caused a stampede of customers to rush out the door. In the fire and rush to the exit, there were damages. - Damage to the Fashion, Inc Building $500,000 - Customer A won lawsuit for damages: $10K in medical expenses, $5K to the wedding dress she had just purchased, $10K in lost wages, $2,000 pain and suffering, $7,000 punitive damages, Defense Costs $3K - Neighbor sued and won for Damages to neighbor's building: $400K in direct loss to the building, $100K in personal property and $200K in lost income. Defense costs $50,000 What is the total amount that the CGL insurance company will pay for these losses?

- Customer A: $10K medical + $5K wedding dress + $10K lost wages + $2K pain and suffering + $3K defense - Neighbor: $400K building + $100K personal property + $200K lost income + $50K defense Total: $780,000

Nightclub Fire - The Station

- Customers sued... 1. nightclub owners (premises and operations) 2. the band (operations) 3. radio station- camera (operations) 4. Pyrotechnics manufacturers (products) 5. Pyrotechnics - set-up (completed operations) 6. Sound-proofing manufacturers (products) 7. Government/Fire Marshall (operations) 8. Angel Soft (products) (was dismissed from the case)

Commercial General Liability Policy Parts

- Declarations pages - Policy Forms: 1. Insuring Agreement 2. Definitions 3. Exclusions 4. Conditions - Endorsements

How lawyers are paid

- Defendant's lawyers are paid by the hour - Plaintiff's lawyers are paid by a % of the winnings

Suppose there is a fire that damages the insured's company and a neighboring company. The insured has CGL Limits as follows: General Aggregate Per Occurrence $1m General Aggregate $2m Damage to Premises You Rent $100,000 Medical Expenses $5,000 The fire caused the following damages: Injuries to 10 customers, Damage to Neighbor's Building ($400,000), Injuries to Neighbor's employees ($100,000) Injuries to Insured's Employees ($25,0000) What would the CGL cover?

- Injuries to Customers? Yes, we could use Medical Expenses to cover each customer ($5K x 10 = $50,000 total) - Damage to neighbor's building? Yes. - Injuries to neighbor's employees? Yes. - Injuries to insured's employees? No, Workers Comp. will cover them. Total= $525,000, which will erode the $1m per occurrence limit.

Coverage C: Medical Payments

- Insuring Agreement: We will pay medical expenses as described below for bodily injury caused by an accident on premises you own or rent, on way next to premises you own or rent, or because of your operations - Payments are made regardless of fault. This is different from Coverage A because Cov. A must prove legal liability before payments are made. - No law suit, but the limit is very low (usually $5K) - This is only available for medical expenses, not PD or General expenses. - the insured has the option to use this coverage

CGL Premises and Operations

- Liability arising out of your business or operations - If a business is conducting operations away from its own premises, then the place of operations becomes the business' premises for the time that they are conducting operations - Depending on the business, these may be closely related - common exposures to many businesses - may also be referred to as "OL&T" exposures: owners, landlords, and tenants

Risk Control Considerations Pre-Accident Techniques:

- Loss Prevention - Loss Reduction - Avoidance - Cost-Benefit Analysis - Legal and Insurance Requirements - Public Perception - Risk-Tolerance of the Company

CGL Coverage C

- Medical payments; pays for medical expenses incurred for BI caused by an accident on premises within 1 year of the date of the accident; made without regard to fault - No fault payments

Punitive Damages

- Monetary damages to punish the wrongdoer and deter similar conduct in the future - usually pretty rare - Ex: McDonald's customer spilt the hot coffee in her lap, and it turns out McD's knew they were serving it too hot, so the court ordered them to pay $2.6m in punitive damages - THE CGL DOES NOT PAY PUNITIVE DAMAGES!! Punitive damages are not coverable by the policy in most states. The insurance policy does not say anything about punitive damages, it is silent. It is statutes that decide. It would not be a punishment to the insured if the policy paid for them.

What does the CGL insure?

- Premises and Operations - Products and Completed Operations

Damages from Property Damage (PD)

- Property damages include physical damage to tangible property, including loss of use and the loss of use to tangible property that is not physically damaged.

CGL Coverage A: Who is an Insured?

- Section II of the CGL indicates the individuals and organizations that are considered "insureds". If designated in the Declarations: 1. Sole proprietorship: owner and spouse 2. Joint Venture/Partnership: partners, members, and spouses 3. LLC: members and managers 4. Corporation: officers, directors, and stockholders Insureds also include persons not included in the policy: - Volunteers for organization, employees acting within the scope of the company, legal representative if named insured dies, any newly acquired or formed organization

Legal Liability Based on Statutes

- State/Federal: Statutes - Local: ordinances - laws passed by a legislative body that may increase liability or make a party strictly liable - Common Statutes: 1. Workers Comp. pays 100% of medical expenses and up to 2/3 of lost salaries for employees 2. Dram Shop Laws: GA laws allow an injured person to hold a seller of alcohol liable if the establishment willingly serves to someone under 21, knowingly serves to noticeably intoxicated, and knows that person will be driving a motor vehicle.

Coverage A Exclusion: Pollution

- This is a very broad/Comprehensive exclusion! - Exceptions to this exclusions: 1. BI/PD resulting from smoke, fumes, vapor, or soot emanating from cooling, heating, or dehumidifying equipment 2. BI/PD from heat, smoke, fumes from a hostile fire

Coverage Territory

- United States, Puerto Rico, and Canada - Broader coverage may apply for international waters or air space between those territories - Territory for products and completed operations may be worldwide if goods or services sold in covered territory or activities of a person based in coverage territory but away for a short time on business, and the suit is brought in covered territory "on the merits" (facts and legal grounds suitable for U.S).

Legally obligated to pay damages (Coverage A)

- Who decides this? Courts. - The insurer may want to settle out of court. What if the insured does not want to settle? Too bad!

Workers Compensation and Employers Liability Loss Exposure

- Workers Comp. statute requires the employer to pay 100% of medical expenses and 2/3 of income when unable to work due to injury - Employer must pay this regardless of negligence for employees covered by the statute, however, employees cannot sue. - If the employee is not covered under WC, they can sue, but they must prove that the employer was negligent

Coverage A Exclusion: Workers Compensation and Employer's Liability

- a near total exclusion for a company's own employees suing the company - if an employee sues their company, it is not covered

General Liability Exposures: Operations

- activities that occur on your premises or off - Ex: a glass blower is doing a demonstration for onlookers. One of the onlookers gets burned by the torch.

Caused by an Occurrence

- an accident, including continuous or repeated exposure to the same general harmful condition Examples: 1. 2017 child crushed to death in accident at Atlanta revolving restaurant - lawsuit was filed in 2019 - BI occurred simultaneously with the accident - This is a premises and operations issue - policy in place in 2017 would pay the claim 2. 2000-2002 person takes medicine to treat acne. Starting in 2006, the person develops seizures from the medicine. Found out in 2010 the seizures were caused by the medicine. Lawsuit filed in 2012. - drug used once or twice -> no side effects. - continuous use -> led to BI of seizures - This is a Products issue - The policy in place in 2000 would pay the claim, since it was the time of the first exposure.

Hold Harmless and Indemnification Agreements (Liability Based On Contracts)

- assume legal liability for another's liability - If Party A agrees to hold harmless and/or indemnify Party B, then Party A has assumed a Contractual Liability - these stipulate which company will be held legally responsible for costs of lawsuits in the event that a component causes BI or PD - Ex: car companies and supplying manufacturers. In 1993, Ford Explorers started rolling over with Firestone tires, so Ford starting using different tires (led to big rivalry) - Hold harmless: "we won't sue each other" - Indemnify: "if someone sues you, we will handle it"

Insured's Duty to Defend

- broader than the duty to pay damages - Insurers must defend the case if plaintiff's allegations may fall within the scope of coverage - In most states, if one allegation would be covered, the defense is covered. - Defense costs are in addition to the limit of insurance. Defense is outside the limits, and does not erode the policy limits. Example: If an insured has a General Aggregate limit of $1m and there are damages of $500K, and the legal costs are $100K, the policy would pay a total of $600,000, but only the $500K would impact the General Aggregate limit.

Coverage A Exclusion: Aircraft, Watercraft, or Auto

- for liability arising out of ownership, operation, rental, or loaned to the insured - Exceptions to this exclusion: 1. owned or rented watercraft ashore 2. non-owned watercraft that is less than 26 feet long and not used to carry passengers/property for a charge 3. Parking non-owned, non-rented vehicles. VALET! 4. Liability assumed under insured contract for use of watercraft and aircraft 5. Operation of machinery and equipment attached to an auto

Coverage A Exclusion: Mobile Equipment

- in general, mobile equipment (bulldozers, forklifts, etc) is covered - The exclusion applies to mobile equipment being transported by an auto owner/borrowed/etc. by insured or when mobile equipment is used in a pre-arranged racing, speed, or demolition contest.

CGL Coverage A Insuring Clause

- insured must be legally obligated to pay damages - damages must result from BI or PD - policy must apply to the BI/PD that the insured is responsible for - BI/PD must be resulting from an "occurrence" - occurrence must have happened during the policy period - take place in the coverage territory - was not known to the named insured - The insurer has the right and duty to defend the insured against any suit seeking those damages.

Coverage B - Personal and Advertising Injury

- insurer agrees to pay those sums that the insured is legally liable to pay as damages because of personal and advertising injury - the policy covers legal liability as a result of: 1. false arrest (does not always include law enforcement) 2. malicious prosecution 3. wrongful eviction or injury 4. slander 5. violation of privacy (Hulk Hogan sex tape lawsuit - he won $75m because he claimed his real-life self was in the tape, not his Hogan persona) 6. copyright infringement

General Liability Exposures: Products

- liability arising out of products that you manufacture, distribute, or sell - Producer, distributors, and sellers are required to exercise reasonable care and maintain certain standards in its selection of goods - Product causes BI/PD -> injured party may sue producer or retailer - Plaintiff may be anyone injured by the product. Does not have to be the one who produced the product Ex: Asbestos Round-Up, McDonald's coffee, etc.

Strict Liability (a type of tort)

- liability in the absence of Negligence and Intentional tort (aka Absolute Liability) - liability that is imposed even though the defendant acted neither negligently or with the intent to cause harm - also used to describe liability from statutes (Workers Comp., Dram Shop) - examples include owning wild animals, blasting/explosive operations, and dangerously defective products

Coverage A Exclusion: Liquor Liability

- only applies if the business is in the business of manufacturing, distributing, selling, serving, or furnishing alcohol - Example: a hair salon that is serving wine at a company Christmas party would not be excluded from this policy, but a bar would be excluded.

Coverage A Exclusion: Damage to Property

- owned, rented, or occupied, unless it is being rented for a period of less than 7 days - the CGL will not pay for your own property - that is what the BPP is for - Building sold or given to another party - property loaned to the named insured - Personal Property in the named insured's care, custody, or control - work that was incorrectly performed - part of a building on which the insured is currently working on - the policy does not cover BI/PD arising out of insured's errors - damage to your product and/or work - damage to impaired property

Desk

- people with an organized desk tend to prefer property, while people with an unorganized desk tend to like liability

At a minimum, to control liability losses

- respect the rights of others - respect laws, statutes, and ordinances - Always question: what grounds would plaintiffs attorney assert?

General Liability Exposures: Premises

- the owner or tenant owes a varying degree of care to those who enter the premises (invitees, licensees, or trespassers

Products: Strict Liability in Tort

- there does have to be anything inherently wrong with the product for producer/retailer, sellers, distributors, to be held liable so long as: 1. the product was defective when it left the manufacturer/supplier 2. the defective product made the product unreasonably dangerous 3. the defective product was the proximate cause of the injuries/damages - Summary: even though there is nothing wrong with the product, the manufacturer/sellers, or distributors can be held liable if there is a dangerous risk and was the cause of the injuries/damages Ex: Window blinds strings can cause of risk of strangulation, but not enough risk to stop production/selling

General Liability Exposures: Completed Operations

- usually involves installation or construction; liability arising out of failure of installation or construction AFTER installation/construction company has finished the work and left to the owner - some courts have applied the strict liability in tort rule the same as in holding the product manufacturer liable to the ultimate consumer

CGL Products and Completed Operations

- while products and completed operations are very different exposures, they are often grouped together because they share an aggregate limit in the CGL Policy, which is separate from the General Aggregate Limit

CGL Coverage A Exclusions

1. Expected or Intended Injury 2. Contractual Liability 3. Liquor Liability 4. Workers Comp. and Employers Liability 5. Pollution 6. Aircraft, Watercraft, or Auto 7. Mobile Equipment 8. Damage to Property 9. War 10. Recall of Products 11. Personal and Advertising Injury (excluded under A, covered under B) 12. Electronic Data 13. Recording and Distribution of Material or Information in violation of the Law

3 Bases for Legal Liability

1. Tort 2. Legal Liability Based on Contracts 3. Legal Liability Based on Statutes

Tort

3 types of Tort: 1. Negligence 2. Intentional 3. Strict Liability

Commercial Liability Loss Exposure and Risk Control

5 main techniques under two categories: 1. Risk Control - can reduce operational and reputational risks - Avoidance - Loss Prevention - Loss Reduction 2. Risk Financing - Retention - Transfer (Ins. and Non-Ins) *It is hard to quantify when risk controls go right - it is hard to measure losses you didn't lose (Ex: Sully) Now we are adding: 3. Claims Management

A BGB chef left a pile of napkins next the grill, which started a fire at BGB and spread to clothing store next door. The following injuries / damages occurred: - Injuries to customer - $10,000 - Injuries to 2nd customer - $12,000; Plus damage to customers property - $1,000 - Injuries to BGB employee $8,000 - Damage BGB employee's property $500 - Damage to customer's car in the parking lot: $30,000 Assume that BGB is legally required to make all payments, how much would the CGL policy pay in total? A. $53,000 B. $31,500 C. $0 D. $30,000

A. $53,000

Which of the following statements about Products Liability is TRUE? A. A retailer may be held liable based on strict liability in tort, even if there is no negligence under common law. B. The manufacturer can only be found liable if found negligent under common law. C. If a product is defective, the injured party can only win a suit against the manufacturer of the product. The injured party can only win against the Distributors and/or retailers is they amended the product. D. The distributor can be found liable under common law governing warranties.

A. A retailer may be held liable based on strict liability in tort, even if there is no negligence under common law.

Diminishing the financial loss potential is called... A. Loss reduction B. loss inclusion C. loss prevention D. loss retention

A. Loss reduction

In No-Fault Auto, what is the key component? A. No need to prove who is at fault B. No need to call the police at scene C. No need to pay the other person D. No need to get insurance companies involved

A. No need to prove who is at fault

Dog House, Inc sells custom dog houses. They own the manufacturing facility, as well as, the sales floor. They have a CGL. policy with the following limits: $1m per occurrence GL, $2m aggregate $1m per occurrence Products/CO, $1m aggregate $1m per occurrence - Per occurrence Personal and Adv. Injury $5,000 Medical Expenses per person The following claims and expenses are incurred during a policy year: A. One month after after buying a Dog House, the latch malfunctions, both a dog and a child are badly hurt. Sues for vet bills for the dog ($10K) and doctor bills for the child ($20K). Defense costs are $7K. B. A water pipe breaks on the Dog House facility and causes flooding to a neighbor's property. Damages are $50,000. Legal costs are $5,000. C. A customer slips on the showroom floor. Dog House, Inc. chooses to pay the medical expenses of the customer without a lawsuit. Customer claims $2,000 in doctor's bills. After making the above payments, how much money remains in the General Liability aggregate?

A. This would not impact the General Aggregate limit because it is a PRODUCT malfunction, which impacts the Products/Completed Operations limit. B. The policy pays the full $55,000, but legal costs do not erode the policy limit, so only $50,000 is deducted. C. $2,000 is deducted from the General Aggregate limit. Total: $1m - $52k = $1,948,000

Which of these is an example of liability imposed by statute? A. Workers Comp B. Health Ins C. Product liability D. Auto Accident

A. Workers Comp

Which type of employee is exempt from workers comp statutes? A. employees who are members of the employers' own family B. real estate agents C. farm workers D. domestic workers

All of the above

BGB began selling "Party Packages" for people to buy and take home. The Party Packages included kegs filled with beer, grills with propane, and all of the food and fixins' for a great party. Customers would pick up the Party Packages and take them to the party location of their choice. Kim bought a party package for a Football tailgate. She loaded up the Swagger Wagon (car) with her 3 best friends and headed to the game. The propane tank attached to the grill malfunctioned and started a fire. As a result of the fire, Kim & her friends, missed the big game & day of tailgating. BGB was found legally liable for the following losses: - Damage to Propane / Grill purchased from BGB: $200 - Damage to Swagger Wagon (the car): $1,000 - Unused Game Tickets: $300 - Defense Costs: $700 How much would Peach Street Insurance pay for these losses? A. $1,000 B. $2,000 C. $1,500 D. $1,200

B. $2,000 $1,000 + $300 + $700 The damage to the Propane and Grill would not be covered because the CGL does not cover the products that caused the damage.

Completed operations is usually associated with what type of work? A. office work B. installation/construction work C. consulting work D. food service work

B. installation/construction work

What does "Res Ispa Loquitor" mean? A. Life is good B. the thing speaks for itself C. i don't care D. you can do it

B. the thing speaks for itself

Damages from Bodily Injury (BI)

Bodily injury, sickness, disease, or even death sustained by a person

Legal Liability Based on Contracts

Breach of Contract - failure of a seller to fulfill its promise - in the eyes of the law, the seller "warrants" that a product is fit for its intended use - if a product fails to function well, the buyer will likely want to their money back (this is not covered by insurance). - things get a bit more serious if the product's failure results in BI/PD (this is covered by insurance) - Ex: a kid was able to open a child-proof container and drink Draino (the parents can sue Draino and the latch-maker) Hold Harmless and Indemnification Agreements - assume legal liability for another's liability - If Party A agrees to hold harmless and/or indemnify Party B, then Party A has assumed a Contractual Liability - these stipulate which company will be held legally responsible for costs of lawsuits in the event that a component causes BI or PD - Ex: car companies and supplying manufacturers. In 1993, Ford Explorers started rolling over with Firestone tires, so Ford starting using different tires (led to big rivalry) - Hold harmless: "we won't sue each other" - Indemnify: "if someone sues you, we will handle it"

In a policy year, BGB was required to pay for the following losses: - Fire Damaged neighbor's building $10,000. Legal costs $1,000 - Customer slipped and fell on the floor: Broke his collar bone $5,000 and his cell phone $1,000, Legal costs $1,000 - The coffee was too hot and a customer suffered third degree burns - $2,000. Legal costs $1,500 How much limit remains in the Products & Completed Operations Aggregate ($150,000)? A. $178,500 B. $182,000 C. $148,000 D. $146,500

C. $148,000 $150K - $2K = 148,000 Only the hot coffee accident is covered because it qualifies as a Products issue. The legal costs do not erode policy limits.

In which one of the following situations would strict liability most likely be imposed? A. An individual is injured by a dog when trying to intervene in a fight between two dogs B. An individual is injured when a surgeon leaves a sponge in his body after an operation. C. An individual is injured by flying debris from a blasting operation. D. An individual in injured in an auto accident by a person driving at an excessive speed.

C. An individual is injured by flying debris from a blasting operation.

For a tort to be excluded by the CGL because it is considered "intentional" it must be... A. Committed by a person who does know their actions will cause harm B. Committed by a person who intends to do the act itself C. Committed by a person who foresees their act will cause harm D. Committed by a person who does not foresee anything by their actions

C. Committed by a person who foresees their act will cause harm

Fire legal liability coverage

CGL has a provision called "Damages to Premises You Rented" which covers the tenant's liability when they legally responsible for causing a fire that damages the building. A limit must be set here.

Major Categories of Liability Loss Exposures

CGL: 1. Premises and Operations 2. Products and Completed Operations Other Policies: 1. Auto 2. Workers Comp 3. Professional, Cyber, Environmental, MGMT, Marine, Aviation

Risk Control Post-Accident Techniques

Claims Management: 1. Expediting Legitimate Claims 2. Fighting fraud

CGL Coverage Limit (Section III)

Coverage limits will be listed in this section like this: $10,000 per occurrence General Liability $20,000 aggregate General Liability $15,000 per occurrence Products/Comp Ops. $30,000 aggregate Products/Comp Ops $10,000 Personal and Advertising Injury $15,000 Damage To Premises You Rent $5,000 Medical Expenses

A customer leaves the BGB intoxicated and drives a car. The customer hits a pedestrian. The pedestrian sues BGB and wins the following damages: - Medical Expenses: $30,000 - Lost income for missing work due to injuries: $6,000 - Pain and suffering: $2,000 - Legal costs were $3,000 How much would CGL Ins. pay? A. $38,000 B. $30,000 C. $39,000 D. $0

D. $0 Since this is a bar that serves alcohol, the Liquor Liability applies, which means there will be no coverage.

BGB sets up a tournament of "throwing axes", where guests throw axes at targets. Many guests had poor aim. The following losses occur: - BGB Building damaged (leased): $5,000 - BGB lost business while building being repaired: $2,000 - Customer's dog hit and needed surgery: $1,500 Assume BGB was found legally liable for damages/ injuries: A. $3,500 B. $7,000 C. $6,500 D. $1,500

D. $1,500 CGL only covers leased building damage if it is a result of fire. In the eyes of the law, pets are considered property, so the customer's dog is covered.

In a policy year, BGB suffers the following losses: - Fire started when a waiter knocked over a Tiki torch: 1. Injured Customer: $20,000 in medical expenses 2. Damage to BGB Building (leased): $30,000 cost of repairs 3. Injured Employee: $7,000 in medical expenses 4. Defense Costs: $5,000 - Customer sick from eating burgers that were improperly refrigerated: 1. Sick customers: $3,000 in medical expenses 2. Defense Costs: $1,000 - Customer got locked in the bathroom when the door lock broke: 1. False Imprisonment: $2,000 2. Defense Costs: $500 BGB was sued and found to be legally liable in all cases. After these losses are paid, how much limit remains in the General Aggregate ($200,000)? A. $145,000 B. $48,000 C. $138,000 D. $148,000

D. $148,000 $20,000 + $30,000 + $2,000 = $52,000 200,000 - 52,000 = 148,000 - Remember, employees are not covered under the CGL. That is what Workers Comp. is for. Also, Defense costs do not erode policy limits. Lastly, the medical expenses for sick customers has its own limit.

In a policy year, BGB was required to pay for the following losses: - Fire Damaged neighbor's building $10,000. Legal costs $1,000 - Customer slipped and fell on the floor: Broke his collar bone $5,000 and his cell phone $1,000, Legal costs $1,000 - The coffee was too hot and a customer suffered third degree burns - $2,000. Legal costs $1,500 How much would the CGL pay in total for these losses? A. $12,000 B. $23,500 C. $17,000 D. $21,500

D. $21,500 All of these damages are covered by the CGL policy.

A customer ate at BGB and became very sick with a gastrointestinal illness. Customer sued BGB and won for the following: - Hospital Bills $7,000 - Extensive Pain $3,000 - Lost Income $5,000 - Punitive Damages: $1,000 - Legal Expenses were $10,000 - Pre-judgement interest was $1,000 How much would the CGL policy pay in total for this loss? A. $27,000 B. $12,000 C. $22,000 D. $26,000

D. $26,000 The CGL will pay for everything except for punitive damages

In a policy year, BGB suffers the following losses: - Fire started when a waiter knocked over a Tiki torch: 1. Injured Customer: $20,000 in medical expenses 2. Damage to BGB Building (leased): $30,000 cost of repairs 3. Injured Employee: $7,000 in medical expenses 4. Defense Costs: $5,000 - Customer sick from eating burgers that were improperly refrigerated: 1. Sick customers: $3,000 in medical expenses 2. Defense Costs: $1,000 - Customer got locked in the bathroom when the door lock broke: 1. False Imprisonment: $2,000 2. Defense Costs: $500 BGB was sued and found to be legally liable in all cases. How much would the CGL insurance policy pay in total? A. $31,500 B. $67,500 C. $59,000 D. $61,500

D. $61,500 20,000 + 30,000 + 5,000 + 3,000 + 1,000 + 2,000 + 500

A BGB chef left a pile of napkins next the grill, which started a fire at BGB and spread to clothing store next door. The following injuries / damages occurred: - Damage to BGB's tables, chairs, grills. $20,000 - Damage to BGB's building (Leased). $30,000 - Damage to the clothing store next door: $25,000 in property damage, $10,000 in medical bills for inured employee of clothing store, $1,000 in damage to employee's of clothing store's property, $12,000 in lost income for clothing store while repairs being made Assume that BGB is legally required to make all payments, how much would the CGL policy pay in total? A. $37,000 B. $98,000 C. $48,000 D. $78,000

D. $78,000

There is an explosion at Fireworks, Inc. All of the following people sued Fireworks, Inc. for damages. All claims would be covered under the Fireworks, Inc. CGL policy except: A. Damages to a customer's car in the parking lot B. Customer loses his hearing due to the explosion. He sues for loss of income. C. A neighboring building catches on fire due to the explosion. Two employees of this neighbor are injured and sue Fireworks, Inc. for medical expenses. D. All of the other answer choices would be covered under the CGL. of Fireworks, Inc.

D. All of the other answer choices would be covered under the CGL. of Fireworks, Inc.

Brandy is a weekly volunteer at her city's history museum. The museum is covered by an unendorsed CGL policy. While at work, a visitor suffers an injury and Brandy is named in the lawsuit. Which of the following describes Brandy's status under the policy? A. Brandy would be a named insured. B. Brandy would be an insured partner. C. Brandy would not be covered. D. Brandy would qualify as an insured

D. Brandy would qualify as an insured

An insured plumbing contractor is installing copper water lines in a new building for a general contractor. While soldering a connection, the plumber causes a fire that damages the building, including the copper water lines. The plumber is covered under an unendorsed CGL form. Which one of the following best explains how the plumber's CGL Coverage form applies to a claim for the building damage, including damage to the copper water lines? A. Coverage applies because the damages property was in the plumber's care, custody, and control. B. Coverage does not apply because the general contractor's CGL. policy would respond. C. Coverage applies to the building damage to the copper water lines being installed by the plumber. D. Coverage applies to the building damage but excludes the damage to the copper water lines being installed by the plumber.

D. Coverage applies to the building damage but excludes the damage to the copper water lines being installed by the plumber.

Which one of these is not a category in civil law? A. Contracts B. Torts C. Statutes D. Intentional

D. Intentional

The categories for torts include all of the following except for... A. Negligence B. Intentional C. Strict Liability Torts D. Non-Intentional Torts

D. Non-Intentional Torts

Who is an Insured? Not in these cases...

Employees/Volunteers are insureds, but not covered under these: - Co-employee and related - medical professional liability - named insured's employees' or partners' property

T/F: An ordinance is a law written at a regional level.

False

T/F: Criminal and civil wrong are the same thing.

False

T/F: Under common law, owners and occupiers have the same duties of care to others.

False

Supplementary Payments: Coverages A and B

In addition to the policy limits, coverage includes: 1. Defense/Legal Costs - all expenses incurred by the insurer - up to $250 for the cost of the bail bond - cost of bonds to release attachments - reasonable expenses incurred by Insured in defending claim Supplementary payments end when the limit is exhausted due to actual reward

Negligence (a type of tort)

Is based on: - a duty of care - breach of duty - injury or damage There must be proximate cause (a connection between the breach of duty and the injury/damage) - This is by far the #1 reason why we have liabilities

Exposures: Automobiles

Liability of the... - owner-operator - owner-non operator - employer (businesses are responsible for employees driving/ acting in the interest of the business)

General Aggregate Limit

Maximum amount that the insurer will pay for the sum of the following: - Damages under Coverage A (except for amounts paid for products completed operations hazard), -damages under Coverage B, and medical payments under Coverage C

CGL Coverage B

Personal and Advertising Injury, including - libel - slander - false arrest - wrongful eviction

Coverage A Exclusion: Contractual Liability

The exceptions to this exclusion are: - Liability the insured would have had in the absence of the agreement - Liability assumed within an "insured contract" (ex: lease agreement)

Personal and Advertising Injury Limit

The most the insurer will pay under Coverage B for the sum of all personal and advertising injury to one person or organization.

Coverage A Exclusion: Expected or Intended Injury

The only exception to this exclusion is bodily injury resulting from reasonable force to protect persons or property.

T/F: In products liability, the manufacturer, supplier, distributor, and retailer can all be held liable.

True

T/F: Premises and operations liability loss exposures can be extended to losses that happen away from premise.

True

Damages to Rented Premises Limit

the max amount paid for damages under Coverage A due to a single fire

Medical Expense Limit

the maximum amount paid under Coverage C because of a bodily injury sustained by any one person

Each occurrence limit

the maximum amount the insurer will pay for the sum of damages under Coverage A and medical expenses under Coverage C arising out of any one occurrence

T/F: A blasting contractor can be held liable for damages done, even if it is determined that they were not negligent

true

T/F: A breach of contract is breaking a contractual promise.

true

Liability Risk

you are responsible for someone else or their stuff.