Property & Liability Insurance

Question 1

What is “Property Insurance?”

Answer 1

Insures the loss of value in property due to a wide range of perils

Question 2

What is “Personal Property?”

Answer 2

Anything owned that isn’t “real property” tangible or intangible

Question 3

What is “Real Property?”

Answer 3

Land and anything attached to it (buildings, fences, roads, driveways, trees, mineral rights, etc)

Question 4

4 most common Property Valuation Methods to settle property claims

Answer 4

1. Actual Cash Value
2. Replacement Value
3. Stated Amount
4. Agreed Value

Question 5

Describe how “Replacement Value” works

Answer 5

The cost to restore or replace insured property as it was prior to the loss (no depreciation)

(usually homeowners insurance)

Question 6

Describe how “Actual Cash Value” works

Answer 6

Generally the replacement cost (not the insured’s cost) less depreciation

(Auto collision and personal property commonly use this)

Question 7

Describe how “Stated Amount” works

Answer 7

Insured selects “Stated Amount” in the property insurance policy

(difficult to value/replace items)

Question 8

Describe how “Agreed Value” works

Answer 8

Property is usually insured for an amount based on appraisals

(e.g. fine art, jewelry, etc.)

Question 9

What is “Liability Insurance?”

Answer 9

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

Question 10

4 most common sources of Liability Insurance

Answer 10

1. Auto-policy
2. Homeowners Policy
3. Comprehensive Personal Liability Policy
4. Umbrella Liability Policy

Question 11

2 Types of damages a person could sue another for (liability)

Answer 11

1.Compensatory Damages
2. Punitive Damages

Question 12

What are “Compensatory Damages?”

Answer 12

An attempt to recover financial compensation or reimbursement for a loss

Question 13

What are “Punitive Damages?”

Answer 13

An attempt to punish a party whose actions have caused suing party injury damage, loss, etc.

Question 14

Losses typically covered by Liability Insurance due to compensatory damages (5 things)

Answer 14

1. Bodily Injury
2. Property Damage
3. Personal Injury
4. Contractual Liability
5. Wrongful Acts (errors, misstatements, neglect, etc.)

Question 15

What are Public Wrongs and does Liability Insurance cover them?

Answer 15

Public Wrongs = crimes (e.g. murder, rape, arson, assault, etc.)

Liabilities incurred via criminal acts are not insurable!

Question 16

What are Private Wrongs and does Liability Insurance cover them?

Answer 16

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

Question 17

What is an “Intentional Tort?”

Answer 17

Violating the rights of another on purpose (libel, slander, trespassing, etc)

[Liability insurance generally does not cover this]

Question 18

What is a “Strict Liability Tort?”

Answer 18

Not necessarily intentional (e.g. pet harms another person)

Question 19

What is an “Unintentional Tort?”

Answer 19

Negligence or carelessness

Question 20

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)

Answer 20

1. Existence of a legal duty
2. Failure to perform that duty
3. Who can or cannot be held liable
4. Is there damage or injury?
5. Proximate cause relationship?

Question 21

What are some examples of “Imputed Negligence?”

Answer 21

1. An insurance company can be held liable if one of their employees sells fake policies
2. A bartender can be held liable if a drunken patron he continued to serve gets in an accident

Question 22

What does “Res ipsa loquitor” mean?

Answer 22

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)

Question 23

What does “Negligence Per Se” mean?

Answer 23

Breaking a law that results in losses is a virtual guarantee of negligence

Question 24

What degree of care does a property owner/occupant owe a Trespasser?

Answer 24

-No responsibility (may not know they’re there)
-Can’t injure them on purpose
-If discovered must keep them safe

Question 25

What degree of care does a property owner/occupant owe a Licensee? (on property with owner’s knowledge)

Answer 25

Generally required to warn them of dangers; no inspection required

Question 26

What degree of care does a property owner/occupant owe a Invitee?

Answer 26

Must inspect and warn

Question 27

What degree of care does a property owner/occupant owe Children?

Answer 27

Find them and warn them

Question 28

3 legal defenses that can defeat a claim for damages (3 things)

Answer 28

1. Assumption of Risk (You went on a safari; you should have known)
2. Contributory Negligence (injured party was also negligent)
3. Comparative Negligence (injured party’s negligence should reduce charges)

Question 29

Comparative Negligence Rule: Pure Rule

Answer 29

Plaintiff recovers damages in amount proportional to defendant’s responsibility

Question 30

Comparative Negligence Rule: 50% Rule

Answer 30

Claimant may recover damages only if the claimant is not more than 50% at fault

Question 31

Comparative Negligence Rule: 49% Rule

Answer 31

Claimant’s damages must be less than negligence of defendant

Question 32

Comparative Negligence Rule: Last Clear Chance Rule

Answer 32

If defendant had a chance to avoid the accident, damages are paid regardless of contributory negligence