1-K Liability Insurance and Policy Limits Flashcards
Liability insurance is designed to cover a ____ party who has been damaged by a policyholder.
3rd
___________- obligated according to law or equity; responsible
Liable
_____________________- insurance that protects the policyholder against any damage or injuries he may cause to another party.
Liability insurance
T or F
Liability insurance always indemnifies a 3rd party, never the insured.
True
Legal liability can be determined outside of ___________.
court
Who does liability insurance cover?
- Named insured; owner of the car
- Insured; someone who uses the car with owner’s permission
Negligence- failure to use a ___________ degree of care in a particular situation; includes both wrongful acts and acts of omission.
reasonable
T or F
Liability insurance sometimes covers intentional acts of wrongdoing on the part of the insured.
False
_______________ liability- the transfer of negligence from one party to another (often applies to employers and parents)
Vicarious
4 elements of negligence
- Defendant had a legal duty to act in a prescribed manner
- Defendant failed to act accordingly (called breach of duty)
- Plaintiff suffered actual loss or injury due to defendant’s action/inaction
- Loss/injury to plaintiff was a direct result of the breach of duty by defendant
3 Degrees of liability
- Full liability-100%
- Partial liability-3rd party shares fault
- No liability- 0%
Defenses to a Claim of Negligence
- Assumption of risk
- Contributory negligence
- Comparative negligence
Assumption of risk- claimant knew he had ____________ to experience damage or injury
potential
Contributory negligence- “If you hadn’t played your part in the negligence, you would not have experienced any damages. Therefore, you receive no ____________.”
indemnification
Comparative negligence- adjuster seeks to suggest a percentage of ____________.
Ex. 75% claimant responsible, 25% policyholder responsible
responsibility
Modified comparative negligence- same as comparative negligence, except that plaintiff receives no ____________ if found to be 50% or more at fault. ie. Some states require 51% or more
damages
Res Ipsa Loquitur- “the thing speaks for itself”
Circumstances of the injury make it ___________ that the defendant is negligent; no proof is needed
obvious
_______________ (Absolute) Liability- holds a party 100% liable for damages when the activity or instrument they are performing is inherently dangerous.
Strict
Dangerous Instrumentality Doctrine- holds a party strictly liable for damages caused during inherently ___________________________________. a.k.a. Inherently Dangerous Activity
dangerous activity
Policy Limit- ______________amount a policy will pay for covered losses
maximum
Single limit liability insurance- establishes one maximum ____________ for liability damages caused by policyholder; limit applies for each occurrence
payout
Split limit liability insurance- establishes ___ different limits on how much the policy will pay out. Limit 1 is max payout for bodily injury for each person injured; Limit 2 is max payout for bodily injuries to multiple persons; Limit 3 is max payout for property damage.
3
Typically written in format 50/100/50 meaning $50k/$100k/$50k
Aggregate limit liability insurance- typically found in ____________ liability policies.
commercial
Aggregate establishes two liability limits:
- Limit 1- max payout for damage or injury per occurrence
- Limit 2- max amount policy will pay per term
EX. $500,000/$1,000,000
