Chapter 4 Insurance Exam

Casualty (liability) Insurance

insurance coverage that applied when the insured is considered legally liable for certain accidents or occurrences that cause bodily injury to others or damage to someone else’s property; third-party insurance

Tort

a wrongful civil act - not a criminal act or breach of contract - that violates a duty or the rights of another, and for which the harmed party may seek compensation, known as damages

Unintentional torts

not caused by a deliberate act, but are the result of the failure to act as a reasonable or prudent person would under the same circumstances

Negligence

an unintentional tort; a failure to exercise the degree of care required by law to protect others from an unreasonable risk of harm

Gross Negligence

the failure to exhibit any sort of care through recklessness or deliberate indifference to the well-being of others

Intentional Torts

deliberate acts that are premeditated or planned and that harm another

Common Law Defenses

those that are based on judicial or court decisions

Contributory Negligence

this defense prevents recovery for damages caused by a negligent party if the claimant (plaintiff) was negligent to any extent

Last Clear Chance

when both the claimant and defendant contribute to the injury, either party could argue that the other had the last clear opportunity to avoid the accident

Assumption of Risk

this defense prevents recovery if the claimant knowingly assumed a risk, thus weakening or eliminating the defendant’s duty of care

Intervening Cause

this defense prevents or limits recovery from the wrongdoer when a distinctly separate negligent act occurs after the original negligent act, but before damage occurs

Statutory Defense

based on legislation

Comparative Negligence

a claimant who is partially negligent is still entitled to damages, but damages are reduced in proportion to the claimant’s negligence

Statute of Limitations

the length of time during which legal proceedings may be initiated, set either by state or federal law, usually beginning the day an event occurs

Damages

amounts paid as compensation to an injured claimaint

Special (economic) Damages

awarded to an injured party for tangible and known expenses (bills, loss of earnings, costs of repairing/replacing damaged property)

General (noneconomic) Damages

awarded to compensate for noneconomic losses that are difficult to calculate and that would be experienced by anyone in similar circumstances

Punitive Damages

in some cases, the law will allow damages to be awarded in addition to compensatory damages in order to punish and discourage a wrongdoer from repeating negligent acts or omissions

Strict Liability (absolute liability)

automatically confers liability to the responsible party based on conditions, activities, or products that are highly hazardous, without the need to establish negligence

Vicarious Liability

while most liability cannot be transferred to another party, some relationships permit a person to have this for the actions of another

Attractive Nuisance

an artificial condition on land that attracts children, such as a swimming pool

Bodily Injury (BI) Liability

refers to physical injury, including sickness, disease, and death

Property Damage (PD) Liability

covers losses arising from physical damage to the tangible property of a third party caused by the acts of an insured

Advertising Injury

refers to similar injuries while the insured is advertising their goods and services, such as misappropriation of advertising ideas, copyrights infringement, and defamation

Medical Payments (Med Pay) Coverage

provides a small amount of insurance to help resolve smaller medical expense claims

Supplementary Payments

claim payments made by the insurer for the costs associated with investigating and resolving claims, such as premiums on appeal bonds, pre- and post-judgment interest, and the insured’s loss of earnings while assisting the insurer in defending a claim; always paid in addition to policy limits

Per Occurrence Limit

the most the policy will pay for all losses arising out of any one occurrence, regardless of other policy limits

Per Person Limit

the most the policy will pay for loss to any one person injured in any one loss, regardless of other policy limits

Aggregate Limit

the maximum amount the policy will pay for all losses submitted during the policy period, regardless of other policy limits

Split Limits

indicate the most the policy will pay for different types of losses that occur as a result of any one loss, regardless of other limits

Severability

the insurance provided applies to each insured separately, rather than to all insureds collectively, without increasing the policy’s limit of liability

Bankruptcy

does not relieve the insurer of any duties or obligations under the policy