Chapter 3 - Casualty (Liability) Basics

Question 1

Define Vicarious Liability

Answer 1

Liability someone has for the conduct of someone else. Example - Parent/child relationships Employer/Employee relationships

Question 2

Define Negligence and Gross Negligence

Answer 2

Negligence - Failure to use ordinary care. Example - ran a red light

Gross Negligence - failure to exhibit any sort of care through deliberate indifference to the well-being of others. Example - driving drunk

Question 3

Define Attractive Nuisance

Answer 3

Something on land that attracts kids and causes the owner to have a special duty of care. Even if the child is not invited, the owner is liable.

Example - Swimming pool

Question 4

Define Loss of Consortium

Answer 4

Compensation to a husband or wife for the loss of a spouse

Question 5

List the two types of compensatory damages

Answer 5

Special Damages and General Damages

Question 6

Define Special Damages

Answer 6

Awards for calculable losses.

Example - Bills, cost to repair damages, earnings

Question 7

Define General Damages

Answer 7

Awards for incalculable losses.

Example - pain and suffering, mental anguish, disfigurement

Question 8

Define Punitive Damages

Answer 8

An award for the injured party to punish the wrongdoer. Most liability policies do not cover punitive damages

Question 9

Define the common law defense known as Contributory Negligence

Answer 9

Both the claimant and the negligent party were at fault and the claimant cannot collect damages

Question 10

List out the 5 defenses an insured can use if accused of negligence

Answer 10

Contributory Negligence
Assumption of Risk
Intervening Cause
Comparative Negligence 
Statute of Limitations

Question 11

Define the common law defense known as Assumption of Risk

Answer 11

Claimant cannot collect money if they knowingly assumed the risk

Question 12

Define the common law defense known as Intervening Cause

Answer 12

Prevents recovery when a second, distinctly separate negligent act occurs after the original but before the damage occurs.

Question 13

Define the statutory law defense known as Comparative Negligence

Answer 13

Reduces the recovery payment in proportion to the claimant’s degree of negligence

Example - Claimant is 5% negligent, so the claimant will only recover 95% of damages

Question 14

Define the statutory law defense known as Statute of Limitations

Answer 14

The period of time for which certain kinds of legal action can be initiated

Question 15

When is strict and absolute liability used?

Answer 15

Strictly for products and absolute is for dangerous animals and activities.

Question 16

Define No-Fault Liability

Answer 16

The injured party collects insurance benefits from his or her own insurance as if it were first-party coverage. Determination of negligence is not needed.
Sometimes known as PIP

Question 17

Define Split Limit Liability

Answer 17

The amount of coverage divided between bodily injury and property damage

Question 18

Define Combined Single Limit

Answer 18

The policy limit applied to either bodily injury or property damage as needed or in any condition