Unit 5 Cram Sheet

Property Insurance

Covers personal belongings and buildings

Casualty Insurance

Pays the other guy

First, second, and third party in casualty insurance

1st = insured

2nd = insurance company

3rd = the other guy

Tort

A civil wrong that unfairly causes someone else to suffer loss

Negligence

Failure to act or not act reasonably

4 Elements of Negligence

Owe a Duty

Breach the Duty

Be the proximate cause

Damages caused

*All 4 MUST be present to be liable for negligence

Defenses against a claim of negligence by another

Contributory

Comparative

Assumption of Risk

Intervening Cause

Statute of Limitations

Last Clear Chance

Contributory Defense

States that if the 3rd party contributed to the cause of the damages at all, the insured cannot be held liable for the damages

Comparative Defense

States that the insured and third party will share liability for damages based on the % that they contributed to the damages

Assumption of Risk

the right of recovery for the injured 3rd party is reduced if they knowingly/voluntarily participated in the activity, assuming the risk

Intervening Cause

States that independent events, such as a heart attack, that lead to loss/damages can remove the liability from the insured

Statute of Limitations

States that there is a time limit for the 3rd party to sue the insured. (typically 2 years from accident for Texas)

Last Clear Chance

subset of contributory defense. If the third party had the last opportunity to avoid the accident, then the insured cannot be held completely liable for negligence and would be eligible for recover of funds

Absolute/Strict Liability

Liability without the requirement of negligence. Applies to extra hazardous activities such as keeping snakes as a pet.

*Even if snake is monitored, you can still be liable without negligence if it bit someone

Vicarious Liability

Liability for the actions of others

*Employee may be liable for employee that wrecks a company car and injures another

3 Types of Compensatory Damages

Special - Provable monetary losses (medical expenses, lost wages, etc)

General - Nonmonetary losses like pain and suffering

Punitive - Gross negligence (intended to reform defendant that caused damages)

Supplementary Payments Acronym

BAILED

BAILED meaning

*What is covered under supplementary payments

Bonds premiums

Aid - first aid at time of accident

Interest on judgement

Loss of earnings

Expenses from investigation

Defense Costs (attorneys, whitnesses, etc)

3 types of liability

Bodily Injury (medical bills, death, pain and suffering)

Property Damage (cars, buildings, etc)

Personal Injury (hurt feelings of person or business - usually caused by slander, privacy invasion, etc

**Personal injury is not usually covered because it is usually intentional

4 Limits of Liability

1. Split (separate limit for different damage type)

2. Combined Single

3. Per Person

4. Aggregate

*First 3 are per occurence, aggregate is for policy period

100/300/50 stands for

*How limits are broken up for split limits per occurence

100 - per person limit

300 - total limit for all people

50 - limit for property damages

Restoration of Limits

For per occurrence limits, the limit is restored after the loss, but it does reduce the aggregate limit which only renews upon policy renewal

4 Duties After a Loss

1. Notify Company Promptly

2. Forward Notices

3. Assist the Company

4. Don’t Assume Liability

6 Common Exclusions of Liability Insurance

1. Damage to property of an insured

2. Bodily injury to an insured

3. Bodily injury to an employee

4. Nuclear energy liability

5. Intentional damage caused by the insured

6. losses covered under workers’ compensation laws