Chapter 9 - Introduction to Liability Insurance Flashcards
Define “bodily injury;”
Includes sickness, disease and even death.
Define “property damage.”
Unintentional damage to the property of others is generally covered by their liability policy. Property damage includes:
Physical injury to tangible property as well as the resulting loss of use; it also includes the loss of use to tangible property that is not physically injured.
Third party coverage only; Define “third party”
Anyone that is not named in the policy
Payment only when insured legally liable; Who determines the matter of “legal liability?”
Although the insured may feel a moral obligation to the injured party, the policy will respond only when the insured is legally liable for the injury or damage caused. NEGLIGENCE MUST BE ESTABLISHED.
**Determination of legal liability is a matter for the courts.
Coverage provided on an occurrence basis; Define “occurrence.” (Aggregate Limit vs Occurrence Limit)
Liability policies insure for bodily injury and property damage on an occurrence basis. This can happen 1) suddenly or 2) occurs over a long period of time
The limit of a policy will be available again to pay future claims in an occurrence limit. For an Aggregate limit, the total paid will differ.
Pays compensatory damages only. Explain the purpose of “compensatory damages.”
Liability policies pay for compensatory damages only.
Compensatory damages are those which are intended to compensate the third party (plaintiff) for the injury or damage caused by insured (defendant).
State the duties owed by the insured to the insurer in the event of an occurrence, claim or action.
Provide the insurer with prompt notification or occurrence which may lead to a claim, provide insurer with copies of any legal documents received, authorize the insure to obtain records and other information, assist investigation settlement or defence of claim, do not assume an obligation / expense other than first aid without insurer consent (to settle)
The insurer agrees to make “Supplementary Payments.”
a) What is the purpose of these payments?
b) Identify four such payments.
a) Additional expenses incurred for investigating, settling or defending a claim
b) Cost of defence, reasonable expense incurred by insured at the insurer’s request to assist the investigation, court costs assessed against insured, interest from the date judgment was rendered
Means an accident, including continuous or repeated exposure to substantially the same general harmful conditions
Occurrence
Refers to damage to tangible property including all resulting loss of use
Property Damage
A sudden and unusual event which is fixed in time.
Accident
Includes sickness, disease and even death.
Bodily Injury
Provide additional payments over and above the amount of the actual judgment.
Supplementary Payments
