Study 1: Introduction to Liability Insurance - Key Terms

Question 1

Tort

Answer 1

A legal wrong arising from a duty fixed by law. A breach of this duty that causes injury to persons or property is repressible by legal action for damages. Liability for tort involves a private or civil wrong or injury and is distinct from that under contract in that the duty is owed to people, generally, rather than to a specified individual.

Question 2

Negligence

Answer 2

Failure to use the degree of care expected from a reasonable and prudent person.

Question 3

Nuisance

Answer 3

In law, a class of wrong that arises out of unreasonable, unwarranted, or unlawful use by a person of his or her own property, whether that property be real or personal or from his or her own improper, indecent, or unlawful personal conduct and producing an annoyance, inconvenience, discomfort, or hurt to others or their property that the law would presume a consequential damage. In insurance claims, it is most frequently met as a cause of action, arising from the escape of some obnoxious substance.

Question 4

Private nuisance

Answer 4

An unlawful interference of a person’s enjoyment and use of his or her land.

Question 5

Public nuisance

Answer 5

An action or a thing that interferes with the general public. It interferes with the public as a class, not merely with one person or a group of citizens.

Question 6

Contractual liability

Answer 6

Liability assumed through a contract, either written or implied. Legal liability policies are based on liability in tort or negligence and provide limited coverage for contractual liability. However, contractual liability may be covered in many instances as an additional risk with an additional premium.

Question 7

Hold-harmless and indemnity provisions

Answer 7

A contractual agreement whereby one party assumes the liability and risk of another party and indemnifies the other party from having to bear the loss.

Question 8

Statute law

Answer 8

A law set down in a government act and passed by legislature.

Question 9

Common law

Answer 9

A system of laws originating and developed in England by judges based on court decisions and similar tribunals. Also known as case law or the law of precedent.