Module 1-K - Liability Insurance and Policy Limits Flashcards
Bodily Injury
Physical damage to someone’s person. Liability insurance covers bodily injury that the
insured might cause to another person through negligence.
Dangerous Instrumentality Doctrine
States that anyone involved in the use of inherently dangerous products or machines is
held 100% liable for their own damages.
Intervening Cause
A separate occurrence that “intervenes” between a defendant’s actions and damage or
loss to another person.
LIability
An obligation to do or not to do something; responsibility for an action.
Liability Insurance
Liability insurance indemnifies a third party for damages caused by the insured’s
negligence.
Limit
The limits of an insurance policy represent the highest amount an insurer will pay. Any
cost above the limits of insurance is the responsibility of the policyholder.
Limit Aggregate
The total amount the insurer will pay for all losses during the policy period. Often
appears preceded by an occurrence limit (e.g. 100,000/1,000,000). The first number
indicates the maximum payout for covered losses in any single occurrence, and the
second number indicates the total amount the insurer will pay for all covered
occurrences during the policy term.
Limit Single
Establishes one maximum payout for liability damages caused by the policyholders
Limit applies for each occurrence
Limit Split
Establishes three different limits on how much the policy will pay out
Limit 1: maximum payout for bodily injury for each person injured
Limit 2: maximum payout for bodily injuries to multiple persons
Limit 3: maximum payout for property damage
Negligence
The failure to exercise a reasonable degree of care in a particular situation.
Strict Liability
Holds a party 100% liable for damages when the activity or instrument they are
performing is inherently dangerous.
Vicarious Liability
When an act of negligence is transferred from one party to another, such as from
employee to employer or from child to parent.
Full Liability
The insured party is 100% at fault for damages to a third party
Partial Liability
The insured party is only partially at fault, or shares fault, with a third party. The third party had some part in his own damages
No Liability
The insured party has 0% or no liability in the damages to a third party
