Property & Liability Insurance Flashcards
What is “Property Insurance?”
Insures the loss of value in property due to a wide range of perils
What is “Personal Property?”
Anything owned that isn’t “real property” tangible or intangible
What is “Real Property?”
Land and anything attached to it (buildings, fences, roads, driveways, trees, mineral rights, etc)
4 most common Property Valuation Methods to settle property claims
- Actual Cash Value
- Replacement Value
- Stated Amount
- Agreed Value
Describe how “Replacement Value” works
The cost to restore or replace insured property as it was prior to the loss (no depreciation)
(usually homeowners insurance)
Describe how “Actual Cash Value” works
Generally the replacement cost (not the insured’s cost) less depreciation
(Auto collision and personal property commonly use this)
Describe how “Stated Amount” works
Insured selects “Stated Amount” in the property insurance policy
(difficult to value/replace items)
Describe how “Agreed Value” works
Property is usually insured for an amount based on appraisals
(e.g. fine art, jewelry, etc.)
What is “Liability Insurance?”
Agrees to pay financial obligations for which an insured is being held legally responsible as a result of actions by insured that are covered by policy
4 most common sources of Liability Insurance
- Auto-policy
- Homeowners Policy
- Comprehensive Personal Liability Policy
- Umbrella Liability Policy
2 Types of damages a person could sue another for (liability)
1.Compensatory Damages
2. Punitive Damages
What are “Compensatory Damages?”
An attempt to recover financial compensation or reimbursement for a loss
What are “Punitive Damages?”
An attempt to punish a party whose actions have caused suing party injury damage, loss, etc.
Losses typically covered by Liability Insurance due to compensatory damages (5 things)
- Bodily Injury
- Property Damage
- Personal Injury
- Contractual Liability
- Wrongful Acts (errors, misstatements, neglect, etc.)
What are Public Wrongs and does Liability Insurance cover them?
Public Wrongs = crimes (e.g. murder, rape, arson, assault, etc.)
Liabilities incurred via criminal acts are not insurable!
What are Private Wrongs and does Liability Insurance cover them?
Private Wrongs = civil (not criminal) wrongs
Most civil wrongs are torts; the rest are breach of contract. So it’s complicated, but SOMETIMES Liability Insurance covers them
What is an “Intentional Tort?”
Violating the rights of another on purpose (libel, slander, trespassing, etc)
[Liability insurance generally does not cover this]
What is a “Strict Liability Tort?”
Not necessarily intentional (e.g. pet harms another person)
What is an “Unintentional Tort?”
Negligence or carelessness
In order for the courts to impose legal liability for losses due to negligence, all of the following elements must exist/have occurred. (5 things)
- Existence of a legal duty
- Failure to perform that duty
- Who can or cannot be held liable
- Is there damage or injury?
- Proximate cause relationship?
What are some examples of “Imputed Negligence?”
- An insurance company can be held liable if one of their employees sells fake policies
- A bartender can be held liable if a drunken patron he continued to serve gets in an accident
What does “Res ipsa loquitor” mean?
An event causing injury/damage was in the exclusive control of the defendant and could not have occurred without negligence
(e.g. a doctor does surgery on the wrong foot)
What does “Negligence Per Se” mean?
Breaking a law that results in losses is a virtual guarantee of negligence
What degree of care does a property owner/occupant owe a Trespasser?
-No responsibility (may not know they’re there)
-Can’t injure them on purpose
-If discovered must keep them safe
What degree of care does a property owner/occupant owe a Licensee? (on property with owner’s knowledge)
Generally required to warn them of dangers; no inspection required
What degree of care does a property owner/occupant owe a Invitee?
Must inspect and warn
What degree of care does a property owner/occupant owe Children?
Find them and warn them
3 legal defenses that can defeat a claim for damages (3 things)
- Assumption of Risk (You went on a safari; you should have known)
- Contributory Negligence (injured party was also negligent)
- Comparative Negligence (injured party’s negligence should reduce charges)
Comparative Negligence Rule: Pure Rule
Plaintiff recovers damages in amount proportional to defendant’s responsibility
Comparative Negligence Rule: 50% Rule
Claimant may recover damages only if the claimant is not more than 50% at fault
Comparative Negligence Rule: 49% Rule
Claimant’s damages must be less than negligence of defendant
Comparative Negligence Rule: Last Clear Chance Rule
If defendant had a chance to avoid the accident, damages are paid regardless of contributory negligence
