Chapter 4 Personal Liability Insurance

Question 1

Criminal Law

Answer 1

• Criminal Code of Canada
• A system of punishment for wrongs against society
• Assesses penalties

Question 2

Civil Law

Answer 2

• Settle disputes between individuals/legal entities

* Goal: compensation for damages

Question 3

Common Law

Answer 3

• Decisions are based on the rule of precedent (case law)

* Influenced by prior court cases with similar circumstances

Question 4

Statue Law

Answer 4

• Derived from bills introduced into parliament

* Overrides common law precedent dealing with same matter

Question 5

Small Claims Court

Answer 5

Matters under $25,000

Question 6

County or District Courts

Answer 6

Matters over the small claims court limit

Question 7

Supreme Court

Answer 7

Provincially – this is an appeals court

Federally – deals with constitutional matters

Question 8

Contract Law

Answer 8

• Ensures proper performance of contract terms

Question 9

tort

Answer 9

a wrongful act which has negligently caused damage

or injury to another. This wrongful act may be an intentional act, a negligent act, or a failure to act.

Question 10

Tortfeasor

Answer 10

a person who commits a wrong against an

innocent party

Question 11

• Joint Tortfeasor

Answer 11

—where there is more than one person who commits a wrong against an innocent party

Question 12

Three elements of torts

Answer 12

Duty Owed
Duty Breached
Damages suffered as a result of defendant’s actions (proximate cause)

Question 13

Intentional Torts

Answer 13

• Where the tortfeasor knew it was illegal before the wrong was committed.
• Liability insurance policies do not pay for injury or damage intentionally caused

Question 14

Unintentional Torts

Answer 14

• Careless/negligent actions result in a wrongdoing,

* Referred to as a tort of negligence.

Question 15

Negligence:

Answer 15

“the omission to do something which

reasonable person would do or doing something which a reasonable and prudent person would not do.”

Question 16

Res Ipsa Loquitur

Answer 16

“the thing speaks for itself”

Question 17

Strict Liability

Answer 17

guilty until proven innocent
Reasonable activity in an unreasonable setting
Dangerous things & Hazardous Activities

Question 18

Liability in Statute

Answer 18

Occupiers Liability Act

Highway Traffic Act

Question 19

The Insuring Agreement

Answer 19

“The insurer agrees to pay all sums which the insured
shall become legally obligated to pay to third parties as compensatory damages to a third party. It must be
caused by an occurrence, it must occur during the policy period, and it must take place in the coverage territory.”

Question 20

Insuring agreement - Bodily Injury

Answer 20

Physical injuries sustained and associated with
external causes.

Includes injury caused by sickness or disease.

Includes death resulting from any such injury at
any time

Question 21

Insuring agreement - Property Damage

Answer 21

Unintentional damage to the property of others
Physical injury to tangible property
Loss of use of such property

Question 22

Insuring agreement - Compensatory Damages

Answer 22

Damages that are intended to compensate the plaintiff
for the injury or damage caused by the defendant

Special – out-of-pocket expenses which are proven by
a receipt or other documentation

General – Difficult to quantify such as pain and
suffering, loss of future income, and loss of enjoyment
of life

Question 23

Insuring agreement - other types of damages not covered

Answer 23

Punitive – designed to punish
Exemplary – designed to set an example
Nominal – designed to determine who is right & wrong
These are not compensatory; therefore, not covered

Question 24

Trespassers

Answer 24

• On the premises without the expressed or implied permission of the occupier.
• Must not set traps, or intentionally cause harm to the trespasser.

Question 25

Licensee (n/a in BC, AB, ON, NS)

Answer 25

• On the premises for own purpose, with occupier’s consent.

* Must protect from known traps and dangers

Question 26

Invitee (n/a in BC, AB, ON, NS)

Answer 26

• On premises due to invitation, with connection of the owner’s business, with the occupier have a material interest in the matter.
• Protect from dangers that may be discovered.

Question 27

Visitor: applicable in BC, AB, ON, NS

Answer 27

• Anyone entering the premises except a trespasser.
• Occupiers Liability Act applies: duty to take reasonable care to ensure all visitors are reasonably safe in using the premises.

Question 28

Children

Answer 28

• Children lack mature judgement needed to avoid risk and must be
protected.
• Premises are to be kept safe from any danger whatsoever.

Question 29

Neighbours and Passers-by

Answer 29

• Actual use of the property,

* Maintenance of buildings.

Question 30

Liability for Animals

Answer 30

Farm Liability Act
 Failure to Maintain Fences

Domestic Animals
 No free first bite!

Wild Animals
 Zoos, pet stores
 Owners are strictly liable for
injuries/damages

Question 31

Liability of Children

Answer 31

Children are responsible for their actions unless proven they were incapable of understanding the consequences of their actions.

Question 32

Parents generally are not responsible for children liability, unless:

Answer 32

• Parent’s failed to properly supervise and control child’s activities,
• Injury or damage was caused by a dangerous things or animals
relinquished by the parents to control of the child,
• Injury or damage caused by a child acting on authority of parents,
• Injury or damage arose out of employment in parent’s business

Question 33

Landlord is not responsible for ensuring building/land rented is fit for its purpose of renting unless;

Answer 33

They specifically warrant the fitness for
such purpose
They conceal any adverse conditions

Question 34

Landlord is responsible for building and land rented when:

Answer 34

Rental of furnished premises
Landlord has contracted for maintenance
and fails with reasonable notice
Buildings with multiple tenants—common
areas

Question 35

Two or more persons acting negligently are

considered joint tortfeasors, and each may be held liable forthe entire amount:

Answer 35

Allows innocent victim to be compensated, even if amount of liability is disputed between tortfeasors

Each tortfeasor will generally agree to pay equal share of damages, and then take steps to resolve their own dispute

Question 36

Occupiers of
property are not
liable when the
damage is due to
the negligence of
an independent
contractor if:

Answer 36

The occupier exercised reasonable care in the
selection of the independent contractor,

Was reasonable that the work the contractor
was engaged should have been undertaken.

Question 37

Exceptions to Independent Contractors Liability

Answer 37

The work is inherently dangerous
Injury/damage results from defective fixtures,
machinery or equipment supplied by the occupier
The occupier controls the manner in which the
work is to be done

Question 38

Coverage E - Personal Legal Liability

Answer 38

• Minimum $1Million liability

Question 39

Coverage F - Voluntary Medical Payments

Answer 39

• $5000

Question 40

Coverage G - Voluntary Payment for Damage to Property

Answer 40

• $1000

Question 41

Coverage H – Voluntary Compensation for Residence Employees

Answer 41

• As per schedule

Question 42

• Persons Insured is the same as the property section, but extended to include:

Answer 42

A person or organization legally liable for an animal or watercraft owned by the insured (except businesses)

A residence employee using a motorized vehicle in the course of performing their duties (lawnmowers)

Legal representative after the death of the insured (maintenance of property)

Any person residing the in the household after the death of the insured

Question 43

Liability coverage extends to the following locations, no need to specify:

Answer 43

• Temporary residence if not owned or leased beyond 90 days
• Premises in Canada to be occupied as principle residence from the date
you acquire ownership, but not beyond the earliest of 30 consecutive
days, policy expiration, or termination.
• Cemetery plots
• Vacant land in Canada
• Land you are building a 1-3 family residence to be occupied by you

Question 44

Premises Insured

Answer 44

All premises the named insured/spouse maintains a residence, including seasonal or other residences, provided such premises are specifically described on the Coverage Summary page.

Question 45

Personal Liability

Answer 45

Personal liability insures the legal liability of insureds as private citizens anywhere in the world

• Personal actions
• Arising out of the ownership, use, or occupancy of property
• Conditions of Insured’s Premises are a major source of liability claims

Question 46

Exclusions of Personal Liability

Answer 46

Liability assumed by contract, unless
• Would have been liable in absence of contract
• When liability assumed is related to the premises

Damage to property owned by insured

Damage to property in insured’s care, custody or control, unless caused by fire, explosion, water or smoke`

Question 47

Defense, Settlement & Supplementary Payments

Personal Liability

Answer 47

Expenses incurred in defense
Court costs for personal liability
Post judgment interest on insured amount
Premiums for appeal bonds or bonds to release property as security
Emergency medical expense followed by an insured occurrence for others
Reasonable expenses the insured incurs at insurer’s request

Question 48

Obligations after an Accident

Answer 48

• Promptly give notice (in writing if requested)
• Co-operate
• Unauthorized settlements
Action

Question 49

Coverage F —Voluntary Medical Expenses

Answer 49

Covers medical expenses unintentionally caused by
insured, or if third party is accidentally injured on the
premises:
• No requirement for insured
to be legally liable: voluntary
• Payment:
 Limited amounts
 Limited to one year from
date of accident

Question 50

Coverage G —Voluntary Payment of Damage to Property

Answer 50

For unintentional direct damage
caused by insureds to property of
others even though they are not
legally liable, including:
• Damage intentionally caused by an
insured 12 years of age and under
• Minimal amounts of coverage