Unit 5

Question 1

tort

Answer 1

a civil wrong that unfairly causes someone else to suffer loss

Question 2

negligence

Answer 2

failure to act reasonably; failure to do or not to do something

Question 3

torts are part of a civil law meaning…

Answer 3

if guilty, the party is only liable to pay money (no jail time)

Question 4

establishing negligence requires four factors:

Answer 4

• legal duty owed (ex. I have a legal duty to drive responsibly)
• breach of said duty
• proximate cause (aka loss would not occurred if not for this)
• damages (cost)

Question 5

contributory negligence

Answer 5

if a person contributed to their own damages, another party cannot be held liable – if proven, the accused party will pay no damages

Question 6

comparative negligence

Answer 6

if both parties contributed to a loss, each party would be responsible for an appropriate amount of the damage (ex. 60/40, 70/30, so on)

Question 7

assumption of risk

Answer 7

bars or reduces right of recovery if the negligent third party voluntarily and knowingly participated in the activity causing injury

Question 8

intervening cause

Answer 8

when an independent event affects the chain of events

ex. suffering a heart attack while driving and causing an accident; one party could argue that the heart attack was an intervening cause and therefore they’re not liable

Question 9

last clear chance

Answer 9

employed in contributory negligence jurisdictions. under this, a partially negligent person can recover if he is able to show that the defendant has the “last opportunity” to avoid the accident

Question 10

absolute/strict liability

Answer 10

under absolute/strict liability, negligence does not have to be present; under law, entities can be held liable for damages even if they were “as careful as possible.” this usually applies to anything involving dangerous materials

Question 11

vicarious liability

Answer 11

when a person may be held responsible for negligent acts of another (ex. a delivery driver causes an accident injuring someone –> employer can be held liable)

Question 12

compensatory damages

Answer 12

reimburse injured party for losses actually sustained: special and general damages

Question 13

special damages

Answer 13

direct/specific expenses, such as medical expenses, lost wages, etc.

Question 14

general damages

Answer 14

compensate for pain, suffering, mental anguish

Question 15

punitive damages

Answer 15

punish defendants for egregious misconduct and deter similar behavior in the future

Question 16

liability insurance

Answer 16

protects an NI from losses arising from liability claims by transferring burden of loss from insured to insurer

Question 17

bodily injury liability

Answer 17

injury, sickness, disease, and death arising from such

Question 18

property damage liability

Answer 18

damage/destruction to property

Question 19

personal injury liability

Answer 19

slander, libel, false arrest, invasion of privacy

Question 20

split limit liability policy

Answer 20

has a separate limit for BI per person, per accident, and PD has a separate limit per accident

Question 21

what would 100/300/50 mean in a split limit liability policy?

Answer 21

100 – $100kpp
300 – $300k limit for all persons in an accident
50 – $50k for PD/accident

Question 22

single/combined limit policy

Answer 22

has one limit that applies to both BI and PD

Question 23

occurrence

Answer 23

can mean either a single accident or a loss that occurs over time (such as living in a home with lead paint – multiple exposures)

Question 24

aggregate limit

Answer 24

a limit that applies to all losses within any one policy term; when policy is renewed, so is the aggregate

(ex. a policy can have a $100k limit/occurrence but a $1million aggregate that total losses for the term cannot exceed)

Question 25

restoration/non-reduction of limits

Answer 25

states that a policy limit will be restored after a loss and that payment of loss reduces aggregate limit

Question 26

there are certain supplemental coverages most policies include with no additional charge, what are they? (6)

Answer 26

BAILED Bonds Aid Interest Loss of earnings Expenses Defense costs

Question 27

duties after loss state the insured must... (4)

Answer 27

- notify company - forward any applicable notices/demands - give any necessary assistance to case - do not voluntarily assume any liability without consent of insurer

Question 28

5 liability policy exclusions

Answer 28

- damage to property of an insured - BI to insured or an employee - nuclear energy liability - intentional damage