Liability Risk and Homeowners Insurance Study Guide

Practice flashcards covering liability types, negligence elements/defenses, legal doctrines, and homeowners insurance forms and coverages.

Compensatory Damages

Payments intended to compensate an injured person and restore them to the financial position they were in before the injury, including medical expenses, lost wages, and pain and suffering.

Punitive Damages

Awards used to punish extremely reckless or intentional behavior, such as gross negligence or fraud, rather than to compensate the victim.

Special Damages

A subset of compensatory damages that covers economic losses that can be specifically calculated, such as medical expenses, lost wages, and repair bills.

General Damages

A subset of compensatory damages for losses that are harder to calculate, such as emotional distress, pain and suffering, and loss of enjoyment of life.

Duty

The first element of negligence, established when a person owes another person reasonable care, such as a driver's duty to obey traffic laws.

Breach of Duty

A person's failure to act reasonably, such as texting while driving or running a stop sign.

Actual Cause

Determined by the "But For Test," asking if the injury would have occurred but for the defendant's actions.

Proximate Cause

An element of negligence requiring that the injury must have been a reasonably foreseeable result of the defendant's actions.

D-B-C-D

A memory trick for the four elements of negligence: Duty, Breach, Cause, and Damages.

Contributory Negligence

A defense to negligence where if the plaintiff is even $1\%$ responsible, they receive nothing ($0$ recovery).

Comparative Negligence

A system where damages are reduced according to the plaintiff's percentage of fault.

Pure Comparative Negligence

A system where a plaintiff can recover damages regardless of their level of fault, reduced by their specific percentage of responsibility.

Modified Comparative Negligence

A rule where the plaintiff receives $0$ recovery if they are more than $50\%$ or $51\%$ responsible for the loss.

Assumption of Risk

A defense used when the plaintiff knew the danger, understood it, and voluntarily accepted it.

Last Clear Chance Rule

A rule favoring the plaintiff where the defendant is held liable if they had the last opportunity to prevent the accident but failed to do so.

Strict Liability

A doctrine where the defendant is automatically liable for certain dangerous activities, such as keeping wild animals or using explosives, regardless of negligence.

Res Ipsa Loquitur

A Latin phrase meaning "the thing speaks for itself," applied when an accident ordinarily would not happen unless negligence existed.

Joint and Several Liability

A doctrine allowing a plaintiff to collect all damages from one defendant among multiple responsible parties; that defendant may then seek reimbursement from the others.

HO-4

The homeowners insurance form specifically designed for Renters.

HO-6

The homeowners insurance form specifically designed for Condos.

HO-2

A homeowners insurance policy that covers "Named Perils" only.

HO-3

The most common homeowners policy, providing open peril coverage for the dwelling and named peril coverage for personal property.

HO-5

The homeowners insurance form providing the broadest protection, with open peril coverage for both the dwelling and personal property.

Coverage A

Section of homeowners insurance that covers the dwelling itself, including the roof, walls, flooring, and attached garages.

Coverage B

Section covering Other Structures separated from the dwelling by clear space, such as detached garages, fences, and sheds.

Coverage C

Section covering Personal Property such as furniture, clothing, and electronics, usually paid at Actual Cash Value unless upgraded.

Coverage D

Loss of Use coverage that pays for hotel expenses, meals, and additional living expenses if the home becomes unlivable due to a covered loss.

Coverage E

Personal Liability coverage that pays for lawsuits, bodily injury, or property damage caused to others.

Coverage F

Medical Payments coverage that pays for minor injuries to guests regardless of fault.

Actual Cash Value (ACV)

A loss settlement method calculated as $\text{Replacement Cost} - \text{Depreciation}$.

Coinsurance Formula

The calculation used to determine loss payment when a property is underinsured: $\frac{\text{Amount Carried}}{\text{Amount Required}} \times \text{Loss} = \text{Payment}$.