Chapter 5 Flashcards
A person’s duty to society and the degree of care required by the law may be insured by providing coverage for:
Select one:
a. property insurance
b. liability insurance
The correct answer is: liability insurance
The limit payable for all losses in a policy year is the:
Select one:
a. aggregate limit.
b. occurrence limit.
The correct answer is: aggregate limit.
Personal Injury Liability covers each of these EXCEPT:
Select one:
a. malicious prosecution
b. wrongful eviction
c. discrimination
d. slander
Personal Injury will cover things like wrongful arrest, false imprisonment, malicious prosecution, libel, slander, and wrongful entry or eviction. However, discrimination is an exclusion from the Personal Injury coverage.
The correct answer is: discrimination
Liability insurance is a:
Select one:
a. two party contract with payment to a third party.
b. three party contract with payment to the insured.
We can say it both ways. It is a two-party contract with payment to a third party or it is a three-party contract with payment to a third party. But it doesn’t pay the Insured! Property policies pay the Insured. Liability policies pay the third party - the victim.
The correct answer is: two party contract with payment to a third party.
Liability for the destruction of property is covered by:
Select one:
a. Property Damage Coverage
b. Physical Damage Coverage
The correct answer is: Property Damage Coverage
The aggregate limit is the limit per:
Select one:
a. calendar year
b. policy year
The correct answer is: policy year
A car dealer sold a new car. Unfortunately, a shock absorber fell off the car, resulting in an accident. Both the car dealer and the manufacturer will most likely be held liable under the concept of:
Select one:
a. strict liability
b. absolute liability
c. negligence
Absolute liability involves ultra hazardous activities, such as keeping wild animals or storing nuclear waste. Those situations don’t apply here.
Sellers and manufacturers have “strict liability” for injuries caused by a defective and dangerous product regardless of whether negligence was involved.
Products liability cases are invariably decided on the basis of strict liability because it is so easy to show that the product was defective. Negligence is rarely used to bring such cases because of the difficulty of proving carelessness.
The correct answer is: strict liability
A carpenter working on a house has a hammer slip from his hands, but no damage occurs. This is not an accident because:
Select one:
a. it happened very suddenly.
b. no damage occurred.
c. it was unexpected.
d. it was not intentional.
The correct answer is: no damage occurred.
Negligence is determined by:
Select one:
a. how the accused has acted in the past.
b. how a reasonable person would have acted under the circumstances.
The correct answer is: how a reasonable person would have acted under the circumstances.
Supplementary payments cover:
Select one:
a. defense costs
b. medical expenses
The correct answer is: defense costs
Negligence is:
Select one:
a. failure to act as a reasonable person.
b. any act which injures another.
The correct answer is: failure to act as a reasonable person.
Which of the following is an example of vicarious liability?
Select one:
a. A store owner is held liable for carelessly dropping a box on a customer’s foot.
b. A store owner is held liable when a store employee carelessly drops a box on a customer’s foot.
Vicarious liability refers to liability for the acts of another. An employer has vicarious liability for the acts of its employees. This point is covered in the Update on the last page of Chapter 5.
The store owner dropping the box is ordinary negligence by the store owner. It does not involve liability for the acts of another.
The correct answer is: A store owner is held liable when a store employee carelessly drops a box on a customer’s foot.
Which of these involves negligence?
Select one:
a. A driver goes too fast and hits another vehicle.
b. A driver runs a stop light.
Without injury or damage, there is no negligence.
The correct answer is: A driver goes too fast and hits another vehicle.
The Insurer won’t cover:
Select one:
a. Compensatory Damages
b. Punitive Damages
The Insurer will cover Compensatory Damages, but Punitive damages are usually excluded from coverage.
The correct answer is: Punitive Damages
Which adds an unspecified amount (rather than a specific amount) to the policy’s limit of liability?
Select one:
a. Supplementary Payments
b. Med Pay
The correct answer is: Supplementary Payments
