Study 8: Liability Insurance - Key Term

Question 1

statute law

Answer 1

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

Question 2

precedent

Answer 2

A legal decision that serves as a basis to resolve subsequent disputes in similar cases.

Question 3

tort

Answer 3

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 4

negligence

Answer 4

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

Question 5

private nuisance

Answer 5

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

Question 6

public nuisance

Answer 6

A cause of action for personal injury or other loss in which a private claimant must be able to show that he or she incurred a special loss beyond the inconvenience or annoyance suffered by the general public.

Question 7

occupancy

Answer 7

The act of holding possession of a property or premises. The term implies the use of the building for the purposes described in the policy, and no other. An occupied building has furnishings and/or people in it.

Question 8

occupier

Answer 8

The person who has immediate supervision or control of the premises and the power to admit or deny entry to others.

Question 9

trespasser

Answer 9

A person who wrongfully enters onto someone else’s land with neither the right nor permission to be there.

Question 10

licensee

Answer 10

A person who ahs permission to enter a premises for his or her own purposes

Question 11

contractual entrant

Answer 11

A person who enters onto premises under a contract with the occupier; for example, a hotel guest or a theatre-goer.

Question 12

invitee

Answer 12

A person who is expressly or impliedly invited onto the premises for some purpose involving economic or potential economic benefit to the occupier of the premises. For example, a customer entering a store for the purpose of making a purchases.

Question 13

attractive nuisance

Answer 13

A legal tort doctrine that holds that any person who has or creates any condition on her premises, private or public, that may reasonably be considered to pose a danger to children and at the same time attract them (to it) has a duty to take precautions as a reasonable person would do to prevent injury to minors of tender years.

Question 14

strict liability

Answer 14

Liability imposed by a court or by a statute in the absence of fault when harm results from activities or conditions that are extremely dangerous, unnatural, hazardous, extraordinary, abnormal, or inappropriate.

Question 15

contributory negligence

Answer 15

Many accidents are the partial fault of both parties who are involved in the accident. The plaintiff who sues another party for damages may also be guilty of some negligence, such is a concurrent causes of the damage, and is therefore guilty of contributory negligence.

Question 16

defamation

Answer 16

Making false or derogatory statements in writing or orally that damage a person’s character, reputation, or business.

Question 17

libel insurance

Answer 17

Insurance against claims arising from alleged libel, slander, defamation of character, ect. Principally written for the protection of those engaged in the publishing or advertising fields, as well as TV and radio broadcasters. Also provided as an extension to a liability policy as part of personal injury cover, which also includes false arrest, malicious prosecution, and wrongful eviction.

Question 18

slander

Answer 18

The oral utterance or spreading of falsehood harmful to another’s reputation. Slander is spoken; libel is written.

Question 19

additional insured

Answer 19

A person other than the named insured who is protected by the terms of the policy. The additional insured may be named or unnamed.

Question 20

vicarious liability

Answer 20

A situation in which one party – for example, an employer – is held partly responsible for the unlawful actions of a third party, an employee. Vicarious liability can arise in situations where one party is supposed to be responsible for (and have control over) a third party, and is negligent in carrying out that responsibility and exercising that control.

Question 21

personal liability

Answer 21

Liability insurance for an individual’s personal liability exposures such as premises, personal activities, some contracts, and certain incidental coverages. This insurance does not include automobile liability or business-related losses.

Question 22

premises

Answer 22

A building, including the land immediately surrounding it and belonging to it.

Question 23

legal liability

Answer 23

Liability imposed by law on individuals or corporations to pay for harm done to others. Such law may be the common law, statute law, or customs that over a period of time have taken on the same status as law. Legal liability may also be assumed under the terms of a contract.

Question 24

compensatory damages

Answer 24

A sum of money to which a plaintiff is entitled that makes amends for an actual loss sustained and nothing more.

Question 25

bodily injury

Answer 25

A term used in auto and liability policies meaning physical injury, including sickness, disease, mental injury, shock, or death.

Question 26

property damage liability insurance

Answer 26

Protection against liability for damage to the property of another, including the loss of the use of property.

Question 27

aggregate

Answer 27

1. To bring together.

2. The total sum, mass, or assemblage; overall total.

Question 28

occurrence

Answer 28

1. A happening or event
2. The continual or repeated exposure to an unfavorable situation neither intended nor expected to cause injury or damage.
3. The grouping of related losses into a single loss situation.

Question 29

personal injury liability

Answer 29

Injury other than bodily injury arising out of defined causes that usually include false arrest or detention, malicious prosecution, wrongful entry or eviction, libel or slander, or violation of a person’s right to privacy other than in the course of advertising, broadcasting, television, or publishing.

Question 30

products and completed operations insurance

Answer 30

Liability insurance, generally for contractors, for product liability and for claims arising out of completed work.

Question 31

environmental impairment liability (EIL) insurance

Answer 31

A specialized insurance policy that covers liability and sometimes cleanup costs associated with pollution.

Question 32

respondeat superior

Answer 32

A legal maxim meaning that in certain cases the master is liable for the wrongful acts of his servant, and a principal is similarly responsible for the wrongful acts of his agent.

Question 33

non-owned automobile insurance

Answer 33

A policy that protects the insured against third-party claims arising out of some other person using his own vehicle in the business of the insured.

Question 34

professional liability insurance

Answer 34

Protects professionals against liability for damages and the cost of defense arising from their alleged or real professional errors or omissions in the practice of their profession.

Question 35

claims-made basis

Answer 35

A provision in some insurance and reinsurance contracts covering only claims made during the term of the contract.

Question 36

directors and officers (D&O) liability insurance

Answer 36

Protection for officers and directors of a corporation against damages resulting from negligent or wrongful acts in the course of their duties. Also covers the corporation for expenses incurred in defending lawsuits arising form alleged wrongful acts of officers or directors. These policies always require the insured to retain part of the risk uninsured. Also called D&O liability insurance.

Question 37

umbrella policy

Answer 37

A special form of liability policy designed to protect the insured for certain unknown contingencies over and above other coverages and to provide excess insurance.

Question 38

drop-down coverage

Answer 38

A clause in umbrella policies providing that the umbrella will “drop down” over reduced or exhausted underlying policy aggregate limits. Some umbrellas maintain their own coverage terms when they drop down; others assume those of the primary policy.

Question 39

completed operations insurance

Answer 39

Coverage for injuries or damage, excluding damage to the completed work itself, occurring after the completion of an operation but attributed to that operation.

Question 40

self-insured retention (SIR)

Answer 40

A dollar amount specified in an insurance policy (usually a liability policy) that must be paid by the insured before the insurance policy will respond to a loss.

Question 41

excess insurance

Answer 41

Insurance that does not participate until all other similar insurance on the same subject is exhausted, or until the loss exceeds a previously agreed-upon amount. Where there are two policies on a risk and both contain a provision that they are “excess to all other insurance,” the problem is resolved by the general “guiding principles.” This is usually interpreted so that each insurer contributes pro rata to the loss.

Question 42

following form excess liability insurance

Answer 42

Excess liability insurance subject to terms and conditions of the primary policy.