Chapter 3 Casualty (Liability) Basics

Question 1

Tort

Answer 1

wrongful act, other than a breach of contract or a crime that violates a duty or the rights of another and for which compensation may be sought from the responsible party

Question 2

Compensatory Damages

Answer 2

awarded to an injured party for actual loss sustained

Question 3

Special Damages

Answer 3

compensatory damages for tangible expenses such as bills, loss of earnings, and the costs to repair or replace damaged property

Question 4

General Damages

Answer 4

compensatory damages for pain, suffering, mental anguish, disfigurement, and similar types of losses that cannot be objectively calculated

Question 5

Personal Injury Liability

Answer 5

legal liability arising from the wrongful conduct of the insured resulting in injuries to one’s mental or emotional wellbeing and not bodily injury or property damage

Question 6

Medical Payments Coverage

Answer 6

pays for necessary medical, surgical, x–ray, dental, ambulance, hospital, professional nursing, and funeral expenses incurred by a third party on the insured’s premises regardless of fault.

Question 7

Comparative Negligence

Answer 7

involves fault on the part of all parties and the damages are reduced in proportion to the degree of negligence

Question 8

Absolute Liability

Answer 8

claimant does not have to prove fault in order to collect damages

Question 9

Strict Liability

Answer 9

manufacturer is held liable whether or not its product was defective in causing injuries

Question 10

Limit of Liability

Answer 10

dollar amount of coverage specified for a liability loss

Question 11

Pro Rata Liability

Answer 11

sharing of losses by the ratio of applicable limits of insurance each insurer writes with respect to the total of all limits available for the loss