Legal and Insurance Risks: Tort, Negligence, and Liability Laws

Liability Risk

One of the most important areas in insurance and risk management; arises from being legally responsible for harm caused to others.

Legal Wrong

Violation of someone's rights or failure to perform a legal duty; includes crimes, breaches of contract, and torts.

Tort

A legal wrong for which damages can be awarded in court; includes intentional acts, strict liability, and negligence.

Negligence

Failure to exercise the care a reasonably prudent person would under similar circumstances; most common tort.

Four Elements of Negligence

(1) Legal duty, (2) failure to perform duty, (3) damages or injury, (4) proximate cause.

Compensatory Damages

Cover actual losses such as medical bills and pain and suffering.

Punitive Damages

Intended to punish and deter wrongful acts beyond compensatory damages.

Contributory Negligence

Defense where if the injured party contributed to their harm in any way, they cannot collect damages.

Comparative Negligence

Defense where recovery is reduced by the plaintiff's degree of fault (used in many states).

Last Clear Chance Rule

Defense allowing recovery if the defendant had the final opportunity to avoid harm but failed.

Assumption of Risk

Defense where injured party knowingly exposed themselves to danger and accepted the risk.

Imputed Negligence

Negligence transferred from one party to another (e.g., employer for employee actions).

Respondeat Superior

Doctrine holding employers liable for employees' negligent acts committed within scope of employment.

Dram Shop Laws

Hold bars or restaurants liable for harm caused by serving alcohol to intoxicated customers who later cause injury.

Res Ipsa Loquitur

Doctrine meaning "the thing speaks for itself"; negligence is presumed when (1) accident normally implies negligence, (2) defendant had control, (3) plaintiff didn't contribute.

Duties of Property Owners

Differ by visitor: trespassers, licensees, and invitees.

Attractive Nuisance

Dangerous condition likely to attract children (e.g., pool, trampoline); owners must take precautions.

Liability for Animals

Owners strictly liable for harm caused by wild animals; sometimes applies to pets as well.

Current Tort Liability Problems

High costs, inefficiency, unpredictable outcomes, delays; issues include medical malpractice, class actions, cyber liability, and drones.