Casualty (Liability) Basics

Question 1

Tort

Answer 1

Torts can be criminal or civil
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Torts are either intentional or unintentional, HOWEVER, only unintentional torts are covered by liability insurance.

Question 2

Vicarious LIability

Answer 2

Example: Employer/employee and parent/child relationships

Question 3

Negligence

Answer 3

Example: Talia going through red lights at 110 mph.

Question 4

Gross Negligence

Answer 4

Example: I drunkenly drive around on a regular basis for funsies.

Question 5

Attractive Nuisance

Answer 5

Example: Swimming pools.

Question 6

Loss of Consortium

Have you seen The Notebook?

Answer 6

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

Question 7

Compensatory Damages

Answer 7

Two kinds of damage: Special and General (Will talk about on another card.

Question 8

What’s the difference between Special Damages and General Damages?

Answer 8

General Damages is for pain, suffering, mental anguish, and disfigurement, etc. General damaged cannot be calculated or assigned a specific dollar value.

Question 9

Punitive Damages

Answer 9

An award to an injured party in addition to compensatory damages, to punish and discourage a wrongdoer from repeating negligent acts or omissions. Most policies do not provide coverage for this.

Question 10

Bodily Injury Liability

NOT TO BE CONFUSED WITH PERSONAL INJURY BOI

Answer 10

PAYS for MEDICAL BILLS, LOST WAGES, MENTAL ANGUISH, PAIN AND SUFFERING, ETC.

Question 11

Personal Injury Liability

DON’T CONFUSE WITH BODILY INJURY GORL

Answer 11

Examples: LIBEL, SLANDER, FALSE ARREST, INVASION OF PRIVACY, AND COPYRIGHT INFRINGEMENT.
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Generally understood to affect one’s reputation or emotional well being.
Ex 2: A coworker goes around the office saying Stephen is bringing bed bugs into the office, and he has the Corona virus.

Question 12

Property Damage Liability

Answer 12

Example: I once again crash my car into the homies house cause I thought the car was in reverse not drive.

Question 13

Medical Payments Coverage

Answer 13

Also covers funeral expenses.
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When payments are made, that is not an admission of liability.

Question 14

Notice of Loss

Answer 14

Should include the named insured, policy number, and details, about the time, place, circumstances of the occurrence, and names + addresses of any claimants and witnesses.

Question 15

Proof Loss

Answer 15

A formal statement made by the insured and provided to the insurer that provided necessary details for the insurer to determine its liability under a policy.

Question 16

What are the elements of negligence?

Hint: 4

Answer 16

1. Duty Owed
2. Violation of Duty
3. Violation of Duty is Proximate Cause
4. Foreseeable Consequence.

Question 17

Contributory Negligence vs Comparative Negligence

Answer 17

Contributory - Prevents recovery for damages caused by a negligent party if the claimant was negligent to ANY extent.

Comparative - Damages reduced in proportion to the degree of the claimant’s negligence; If the claimant is 5%, negligent and the wrongdoer is 95% negligent, the claimant may only recover 95% of damages.

Question 18

Intervening Cause

Answer 18

Prevents or limits recovery from the wrongdoer when a second, distinctly separate negligent act occurs after the original act, but before damage occurs, and interferes with the chain of events that brings about the loss. The intervening cause must be unexpected and unforeseen.

Question 19

Strict Liability vs Absolute Liability

Answer 19

Absolute; Most often associated with dangerous animal ownership, abnormally dangerous activities, and employers liability for injuries sustained by their employees. Firearms storage, storage of explosives, etc

Vs

Strict; Applies to PRODUCTS.

Question 20

No-Fault Liability

Answer 20

The injured party collects insurance benefits from his or own insurance as if it were first-party coverage, thus eliminating the processing of determining negligence.

Question 21

Primary vs Excess

Answer 21

Primary policy pays before all other policies.

vs

Excess makes payment only after all other insurance in place exhausts its limits or denies coverage.

Question 22

Pro Rata Liability

Answer 22

[Policy B (500,000) + Policy A(250,000)] = Total Insurance(750,000)

Total Insurance(750,000) / Policy A(250,000) = 1/3rd

So it pays 1/3rd of any claim.

Question 23

Difference between aggregate limit and combined single limit?

Answer 23

The aggregate is the most the policy will pay for all losses submitted during the policy limit, regardless of other limits.
The Combined Single Limit is the most the policy will pay regardless of all other limits in any ONE OCCURRENCE.

Question 24

Assignment

Answer 24

The owner of a liability policy cannot transfer policy ownership without the insurer’s written consent.