Lesson 4: Liability and the Claims Process - Who's at Fault?

Question 1

Establishing Negligence

Answer 1

DBCD

Question 2

Occurence

Answer 2

an accident that includes continuous exposure to the same conditions

Question 3

Accident

Answer 3

an unfortunate incident that happens unexpectedly and unintentionally, typically resulting in damage or injury

Question 3

Tort

Answer 3

a civil wrongful act (other than K or criminal) where monetary remedies are sought

Question 3

Liability Losses

Answer 3

The amt of money an org must spend to respond to actual claims brought against it

Question 4

causation

Answer 4

the relation of cause and effect

Question 4

liberalization

Answer 4

other insurance pays its portion of the loss; liberalization provides more or broader coverage than what the insured purchased during the policy term

Question 5

joint tortfeasor

Answer 5

two or more persons whose negligence in a single accident or event causes damages to another person(s)

Question 5

Duty

Answer 5

A duty to act is a legal duty requiring a party to take necessary action to prevent harm to another person or to the general public.

Question 6

Breach (of duty of care)

Answer 6

A breach of the duty of care occurs when one fails to fulfill his or her duty of care or to act reasonably.

Question 7

Causation / proximate cause

Answer 7

Proximate cause exists when the injury is the foreseeable result of the negligence. Example: Someone who causes an accident by texting and driving.

Question 8

Damages

Answer 8

An actual causal connection between the defendant’s conduct and the resulting harm.

Question 9

Absolute Liability

Answer 9

Absolute liability is imposed when the conduct is so hazardous that public policy demands those engaging in it be held responsible. Workers’ Compensation is built into absolute liability.

Question 10

Vicarious liability

Answer 10

Vicarious liability is imposed on one party due to the conduct of another party. Example: A kid hits a baseball through someone’s window. The kid causes the damage, but the parents are held liable.

Question 11

strict liability

Answer 11

The manufacturer of a defective product that causes damage or injury has strict liability. Example: A defective car seat that causes injury to an infant or small child.

Question 12

Named insured

Answer 12

the one who purchased and is afforded the broadest coverage under an ins k

Question 12

First party insurance

Answer 12

benefits to the insured. Pays benefits to insured for losses that occur bc of injury or damage to themselves or property they own (damage could be caused by insured or others)

Question 13

Specific damages

Answer 13

Specific damages are those which are measurable and easily quantifiable, such as medical bills, repair estimates, replacement cost, or loss of income. Any claim to recover these losses would be a claim for specific damages.

Question 13

Second party

Answer 13

usually the insurer

Question 13

Third party

Answer 13

A third party is neither “an insured” nor anyone affiliated with the insurance company.
A third party is the injured person to whom the insured is liable.
Examples of third party insurance include: Auto Liability, Bodily Injury or Property Damage Insurance, Homeowners Liability Insurance, Business General Liability Insurance, Workers’ Compensation Insurance, Professional Liability Insurance.

All of the aforementioned policies provide coverage for the insured but also pay benefits to a party
other than the insured.

Question 14

General damages

Answer 14

General damages is a broader term that includes several intangible elements not measurable by dollar amounts. A person may be awarded in court, general damages such as pain and suffering, humiliation, embarrassment, loss of consortium, or mental anguish.

Question 15

Compensatory damages

Answer 15

Compensatory damage is a term that encompasses specific as well as general damages. This category is intended to compensate individuals for both tangible and intangible losses. Example: Due to an automobile accident, a person suffers specific damages such as vehicle damage or physical injury and general damages such as pain and suffering.

Question 16

Comparative negligence

Answer 16

reduces injury and damages awards proportionally when both the plaintiff and the defendant are negligent. Example: If the other guy is partially at fault, the court will reduce the payments in direct proportion to the shared fault.

Question 16

Punitive damages

Answer 16

Punitive damages are a form of punishment intended to serve as an example to others. The consequence creates disincentives, which discourage other individuals from exhibiting actionable and undesirable behavior.

Question 17

Assumption of risk

Answer 17

occurs when the injured party has put him or herself in a position of known danger and voluntarily assumed the risk. Example: A person enters the lions’ cage at the zoo or someone attempts to walk across a freeway at night. They can reasonably expect a level of risk associated with these behaviors.

Question 18

Intervening cause

Answer 18

when something has happened that the insured is not responsible for, causing someone to be injured. Example: A customer walks into a store, slips and falls after stepping in water dropped from another customer’s umbrella.

Question 19

Defense costs

Answer 19

comprise all fees and expenses incurred while defending against a lawsuit. These include lawyer’s fees, court fees, investigations, a gathering of facts, filing legal paperwork, and other related costs. Post-judgment interest and pre-judgment interest are covered under liability insurance policies.

Question 20

Pre-judgment interest

Answer 20

Pre-judgement interest is the interest that is added before a judgement (up to the limits within Coverage A of the policy).

Question 21

Post-judgment interest

Answer 21

interest added after a judgment

Question 22

Liability exclusion: not covered for theft and injury but damage

Answer 22

ex if a break-in occurs, damage to the property is covered, not the theft

Question 23

Liability exclusion: intentional bodily injury

Answer 23

an attempt or threat to inflict injury that places another person in fear of imminent bodily harm

Question 24

Liability exclusion: care, custody, control

Answer 24

property owned, used, and in the CCC of the insured.

Question 25

Product recall

Answer 25

process of retrieving defective and/or potentially unsafe goods from consumers while providing consumers with compensation

Question 26

any vehicle located in a facility used for racing

Answer 26

ex testing insured’s porsche in closed facility w/ track designed for racing

Question 27

Claims process

Answer 27

loss occurs; report the loss; proof of loss (formal stmt from insured to ins co); special rqmts (insured must cooperate, provide testimony, evidence, separate damaged and undamaged prop, etc.); insurer investigation document claim; verify cause of loss; offer of settlement

Question 28

SIU

Answer 28

the department within an insurance company involved in detecting and pursuing action against fraudulent activities on the part of insureds or claimants.

Question 29

SIU investigates suspected fraud

Answer 29

primarily handles claims of possible, staged car accidents, arson, and questionable medical treatments. When organized gangs or other criminally minded persons stage fraudulent losses, SIUs are the insurance company’s defense. SIU personnel usually have insurance backgrounds in addition to knowledge and experience in law enforcement. In many cases, an SIU will enlist the help of the FBI and police departments to investigate suspicious claims.

Question 30

SIU monitors written procedures

Answer 30

To monitor cases of suspected fraud, SIUs will often hire private investigators. These investigators provide constant surveillance to determine if fraud is being committed. This is especially useful in claims of bodily injury, heavy equipment theft, medical provider schemes, or vehicle finance fraud.

Question 31

SIU anti fraud training

Answer 31

Most insurance companies provide training for agents and claims adjusters to identify red-flags or fraudulent trends. SIUs oversee and supervise this type of training.

Question 32

SIU investigation into possible fraud must include

Answer 32

A detailed analysis of a claim file, application, or insurance transaction.

Identification and interviews of potential witnesses.

Utilizing industry-recognized databases.

Preservation of documents and other evidence.