Unit 5 Basics of Casualty Insurance

Question 1

Casualty insurance is the general term that encompasses many different types of ____ insurance.

Answer 1

Liability

Question 2

____ insurance covers the insured for losses that cause injury or property damage to another person and in which the insured is found to be legally responsible.

Answer 2

Liability

Question 3

A ____ is a civil wrong that unfairly causes someone else to suffer loss or harm resulting in legal liability for the person who commits the ____ious act.

Answer 3

Tort

Question 4

____ is failure to exercise the care that a reasonable person would exercise in like circumstances.

Answer 4

Negligence

Question 5

To estabish negligence, what 4 factors must be involved?

Answer 5

1. Legal duty owed
2. Breach of legal duty owed
3. Proximate cause
4. Damages

Question 6

A ____ doctrine says that if a person contributed to his/her own damages in any way, another party cannot be held liable for the damages. To establish liability, an individual must show that the other party was negligent and that the individual did not contribute to the loss through any negligence on his own part.

Answer 6

Contributory negligence

Question 7

____ laws allow a finding of liability to be made even when both oarties have contributed to the loss, with an award based on the extent of each party’s negligence.

Answer 7

Comparative negligence

Question 8

____ bars or reduces the right of recovery against a negligent third party when he voluntarily and knowingly participated in the dangerous activity that caused his own injury.

Answer 8

Assumption of risk

Question 9

____ is when an independent event affects the chain of events. It may also serve as a defense against liability (example: driver has heartattack and crashes into another car - this could be argued)

Answer 9

Intervening cause

Question 10

The ____ is a doctrine that is employed in contributory negligence jurisdictions. Under this doctrine, a partially negligent person can, nonetheless, recover if he is able to show that the defendant hast the last opportunity to avoid the accident.

Answer 10

Last clear chance

Question 11

____ liability is imposed by law on those participating in certain activites that are considered especially hazardous. Individuals involved in such operations may be held liable for the damages of another, even though the individual tried to be as careful as possible. (used for dangerous materials, hazardous operations, or dangerous animals)

Answer 11

Absolute

Question 12

Another term that is sometimes used for absolute liability is ____ liability. (usually used for products)

Answer 12

Strict

Question 13

____ liability is when a person may be held responsible for the negligent acts of another person who has direct liability.

Answer 13

Vicarious

Question 14

____ damages reimburse the injured party only for the losses that were actually sustained. There are two types of ____ damages: special and general

Answer 14

Compensatory

Question 15

____ damges are intended to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. (example: auto manufacturer sells cars that they knew could explode and burn drivers)

Answer 15

Punitive

Question 16

____ damages include all direct and specific expenses involved in a particular loss, such as medical expenses, lost wages, funeral expenses, and the cost to repair or replace damaged property.

Answer 16

Special

Question 17

____ damages compensate for things such as pain and suffering and mental anguish.

Answer 17

General

Question 18

____ means injury, sickness, disease, and death arising out of injury, sickness, or disease.

Answer 18

Bodily injury (BI)

Question 19

____ means damage to or destruction of property, including loss of use of the property.

Answer 19

Property damage (PD)

Question 20

____ includes slander, libel, false arrest, and invasion of privacy (bodily injury is different from ____ in the insurance business). ____ injury causes “hurt feelings” but does not cause bodily injury. Most policies do not cover this type of injury.

Answer 20

Personal injury

Question 21

100(100k per person) / 300(300k limit for all persons) / 50(50k limit for total property damage per accident) is and example of ____ liability policies formating.

Answer 21

Split limit liability policies

Question 22

____ or combine ____ limit policies have one limit that applies to both BI and PD.

Answer 22

Single or combined single limit policies

Question 23

A ____ limit states how much will be paid for injury to any one person in an occurrence or accident.

Answer 23

Per person

Question 24

The word ____ can mean either an accident, such as a car wreck, or a loss that occurs over time, such as living in an old home with lead paint. Policies usually have no limit on the number of ____ that can happen.

Answer 24

Occurrences

Question 25

An ____ limit is a limit that applies to all losses occurring within any one policy period, if this policy is renewed so is the limit. Ex: 100k per occurrence, 1m for the year.

Answer 25

Aggregate

Question 26

List each letter representation of the acronym BAILED

Answer 26

1. Bonds
2. Aid (first aid)
3. Interest (interest on pre and post-court-ordered judgments)
4. Loss of earnings
5. Expenses (reasonable expenses incurred by the insured at the company’s request in the investigation or defense of a claim)
6. Defense costs

Question 27

The duties after loss condition in liability policies state that the insured must: (4)

Answer 27

1. Notify the insurance company in writing of all losses
2. Forward all applicable demands, notices, or summonses
3. Assist and cooperate with insurance company requests
4. Don’t assume liability or make restitution payments to third parties without the insurer’s consent.

Question 28

Common exclusions in liability policies: (6)

Answer 28

1. Damage to property owned by insured
2. Damage to property in the insured’s care, custody, or control
3. Bodily injury to the insured
4. Losses covered under worker’s compensation laws
5. Losses covered under nuclear energy liability policies
6. Injuries or damages caused intentionally by the insured