Pc Chapter 4

Question 1

Absolute Liability

Answer 1

a tort law concept in which an individual can be found legally responsible without being negligent

Question 2

Accident

Answer 2

an unexpected and unintended change happening occurring at a known time and place

Question 3

Advertising Injury Liability

Answer 3

Liability resulting from damage caused to a business by the misrepresentation of another. Also can include theft of a copyrighted trademark

Question 4

Aggregate Limit

Answer 4

also known as a General Aggregate Limit, this is the limit expressed in a commercial Liability policy indicating much an insurance company will pay in total during any policy period

Question 5

Assumption of Risk

Answer 5

Is a legal defense if a negligence claim. If the injured party undertook an activity known to involve risk ( skydiving for example) it may be difficult for the person to collect damages if they are injured

Question 6

Bodily Injury (BI)

Answer 6

Used extensively in Liability contracts, Bodily Injury refers to injuries sustained by a human being or the death of a human being

Question 7

Breach of Duty

Answer 7

Failure to use a reasonable standard of care

Question 8

Care, Custody or Control

Answer 8

Property in your possession belonging to others for which you are legally responsible. Liability contracts typically exclude coverage for property in your care, custody or control thus creating the need for a bailees coverage

Question 9

Comparative Fault

Answer 9

a legal defense to negligence in which the injured party is held somewhat reasonable for their own injury. if you sued a store for $100,000 and won but the judge or jury determined you were 10% at fault, you would only collect $90,000

Question 10

Compensatory Damages

Answer 10

those damages awarded in a liability claim that are designed to compensate the injured party for their actual loss. Being reimbursed for medical bills and lost wages would be examples of compensatory damages

Question 11

Damages

Answer 11

Typically used in a liability policy, Damages are those losses which occurred as the result of the actions of another. Damages can included things such as medical bills, lost wages, and pain and suffering

Question 12

Defense Cost

Answer 12

If a liability claim is filed against an insured, the insurance company agrees to settle or defend that claim as long as it is a covered claim. If the company elects to defend the claim, they also have agreed to pay all defense cost. ( typically above and beyond the policy limit)

Question 13

Duty

Answer 13

a reasonable standard of care. Tort Law dictates that you have a duty to assure that your actions so not harm others

Question 14

Excess Liability Policy

Answer 14

a liability contract that provides additional dollar amounts of coverage over and above the limits of the underlying coverages. Unlike umbrellas, this contract does not provide any primary coverages

Question 15

Fire Legal Liability

Answer 15

Insurance found in both section II of the Homewoners (casualty) and in commercial general liability policies, it pays for fire damage caused by the insured to non-owned real property in their care. Fire legal liability would provide coverage for example if an insured accidentally burned down a rented cabin or a business owner accidentally set fire to a leased office

Question 16

Intervening Cause

Answer 16

a factor that results in an injury to a third party and which is not under the direct controls of the insured. AN intervening cause may break the direct causation link in a liability claim and perhaps relieve an insured liability for injury caused to a third party

Question 17

Judgement

Answer 17

the finding of a court. Used in insurance in connection with liability claims

Question 18

Limit of Liability

Answer 18

the maximum that the company will pay on your behalf for damage to your property, or the maximum the company will pay on your behalf for bodily injury or property damage for which you are legally responsible

Question 19

Medical Payments

Answer 19

a “no fault” coverage found in Homeworners, commercial general liability policies and automobile policies, medical payments ( medpay ) is designed to pay medical bills, dental bills, and funeral expenses. In homeownders and CGL polices med pay pays for injuries sustained by others, in automobile it pays for injuries sustained by insureds as well as passengers in the insureds auto

Question 20

Negligence

Answer 20

negligence is quite often the basis of liability claims and is defined as “the failure to do or not do what a reasonable person would do or not do in the same or similar circumstances”

Question 21

No Fault

Answer 21

Any situation where recovery or partial recovery is not predicated upon the fault of another party

Question 22

Occurrence

Answer 22

An accident that happens over a period of time. Normally, an accident means a sudden unforeseen event. An occurrence includes all accidents, but it also included losses that happen over a period of time. Black lung disease is not an accident but it is an occurrence. Being hit by a train is both an accident and an occurrence

Question 23

Occurrence Limit

Answer 23

the maximum amount payable by a liability policy for each occurrence

Question 24

Personal Injury Liability

Answer 24

under a commercial general liability policy, personal injury liability refers to damage to an individuals reputation

Question 25

Property Damage ( PD)

Answer 25

in liability contracts damage done to a third party’s property including the loss of use of that property

Question 26

Proximate Cause

Answer 26

a direct and foreseeable link between an insureds actions and any destruction and injury caused by those actions, Proximate cause must be proven in liability claims involving negligence

Question 27

Punitive Damages

Answer 27

Damages awarded by a court designed to punish the wrongdoer

Question 28

Reasonable Person

Answer 28

a hypothetical individual created to determine the appropriateness and prudence of an action taken by another. Negligence cases hinge upon a judge or jury’s determination of what a reasonable person would have done or not done in the same similar circumstances

Question 29

Statute of Limitations

Answer 29

a law limiting the period of recovery for a third party who has suffered bodily injury or property damage at the hands of another

Question 30

Strict Liability

Answer 30

a measure of liability that considers neither duty nor negligence

Question 31

Supplementary Payments

Answer 31

includes payments beyond the expressed dollar amount in a liability contract,

Primary associated with defense cost.

Defense cost can be paid in addition to the expressed limits of the policy

Question 32

Third Party Contract

Answer 32

a liability contract. the three parties involved are the insured, the insurance company and the injured, unknown third party

Question 33

Tort

Answer 33

a wrong perpetrated against another individual or entity. An action, or a failure to act which results in injuries to a third party and serves as the basis of a lawsuit. Negligence is the tort primarily addressed by liability insurance policies

Question 34

Umbrella Policies

Answer 34

Umbrella policies ( both personal and commercial) are purchased to provide excess liability coverage to an insured party

Question 35

Vicarious Liability

Answer 35

the liability concept that states those responsible for the actions of another are potentially liable for losses caused by that person. For example, an employer may be vicariously liable for the actions of an employee