Liability
Liability Risk & Commercial Liability Insurance
Liability Risk: The potential for financial loss due to claims arising from negligent actions or failure to act that result in injury or damage to another party.
Commercial Liability Insurance: A type of insurance that protects businesses from claims resulting from injuries and damage to people or property, covering legal costs and payouts for which the insured party would be responsible.
Basis of Legal Liability
Legal Wrong: A legal wrong is a violation of a person’s legal rights, or a failure to perform a legal duty owed to a certain person or to society as a whole.
Types of legal wrongs include:
Crime
Breach of contract
Tort
Page 4: Understanding Torts
Tort: A legal wrong allowing for remedy through monetary damages.
Parties in a Tort:
Plaintiff: The injured party.
Tortfeasor: The party responsible for the injury.
Types of Torts:
Intentional (e.g., fraud, assault)
Strict Liability (liability without negligence)
Negligence
Page 5: Law of Negligence
Negligence: Failure to exercise reasonable care.
Standard of Care: Varies by circumstance, based on the actions of a reasonably prudent person.
Page 6: Elements of Negligence
Conditions to prove negligence:
Legal duty to use reasonable care exists.
Failure to perform that duty.
Actual damage/injury occurred.
Proximate cause related to the negligent act.
Page 7: Types of Damages
Compensatory Damages: To compensate injured party.
Punitive Damages: To punish wrongdoers and deter future similar acts.
Subtypes of compensatory damages:
General Damages (e.g., pain and suffering)
Special Damages (e.g., medical bills, lost earnings)
Page 8: Legal Collection of Damages
State laws determine damage collection possibilities.
Contributory negligence laws may bar recovery if the plaintiff shares fault.
Page 9: Comparative Negligence
Financial responsibility is shared based on degrees of fault:
Pure Rule: Collect losses reduced by fault percentage.
50% Rule: No recovery if over 50% responsible.
51% Rule: No recovery if over 51% responsible.
Page 10: Defenses Against Negligence Claims
Last Clear Chance Rule: Plaintiff may recover if defendant had opportunity to avoid harm.
Assumption of Risk Doctrine: Acknowledgment of risks prevents recovery if harmed.
Page 11: Imputed Negligence
Vicarious Liability: Negligence of one can be attributed to another.
Examples:
Auto owner's liability for driver's negligence.
Family purpose doctrine for family members.
Dram shop law for alcohol-selling businesses.
Page 12: Res Ipsa Loquitur
Meaning: Presumption of negligence established by circumstance.
Conditions to prove:
Event rarely occurs without negligence.
Defendant had control over the situation.
No contribution from the injured party to the accident.
Page 13: Trespassers and Duty of Care
Trespasser: Someone on property without permission.
Duty of care owed is minimal (duty of slight care).
Page 14: Licensees and Invitees
Licensee: Enter premises for their own benefit (e.g., guests). Owner must warn of apparent dangers.
Invitee: Invited for owner's benefit (e.g., customers). Owner must inspect for dangers.
Page 15: Attractive Nuisance Doctrine
Definition: Hazardous objects attracting children; landowners liable for children's injuries.
Example: Unattended vehicle keys leading to a child’s injury.
Page 16: Auto Liability
Drivers must avoid careless actions.
Owners can be liable even if not operating the vehicle if an agency relationship is established.
Page 17: Governmental Liability
Generally, governmental entities can be sued over most activities.
Sovereign Immunity: Liability for negligence in proprietary functions, eroded over time.
Page 18: Respondeat Superior Doctrine
Employers liable for employees' negligent actions within scope of employment.
Parental Liability: Parents can be liable for children's actions under specific conditions.
Page 19: Statutory Parental Liability
Many states hold parents liable for intentional harm caused by their children.
Strict liability may apply to injuries by pets.
Page 20: Current Tort Liability Problems
Criticisms of the tort system:
Rising costs
Inefficiencies
Uncertain legal outcomes
High jury awards
Long lawsuits
Page 21: Tort Cost Growth Factors
Trends contributing to increased costs:
Juries desensitized to damage risks.
Aggressive litigation.
Rising medical costs.
Class action abuses.
Increased lawsuits against corporate officers.
Media influence on high-verdict cases.
Page 22: Tort Costs vs. GDP
Historical tort costs in relation to U.S. GDP (%):
1950: $1.8B (0.62%)
1990: $130.2B (2.24%)
2016 estimate: $429B (2.3%)
Page 23: Jury Awards Trends
Median & Average Personal Injury Jury Awards 2006-2015:
Analyzed for trends in compensation amounts.
Page 24: State Tort Reforms
Typical reforms to control tort costs:
Capping non-economic damages.
Modifying punitive damages.
Improving ADR processes.
Page 25: Collateral Source and Joint Liability Rules
Collateral Source Rule: Bars evidence of outside compensation.
Joint & Several Liability: Potentially makes one liable for the entire award even if minimally responsible.
Page 26: Medical Malpractice Overview
Medical errors as a reason for lawsuits; standards of practice must be met.
Page 27: Reasons for Increased Malpractice Suits
Lost intimate physician-patient relationships; increasing public litigiousness; media influence; and profitability of malpractice cases for attorneys.
Page 28: Reducing Malpractice Costs
Potential methods:
No charges for “never events.”
Physician apologies not admissible.
Disclosure of medical errors and risk management.
Page 29: Class Action Lawsuits
Allows collective legal action for group damages but questions arise on the benefits to individual members.
Page 30: Cyber Liability
Risks related to unauthorized access to data.
Liable parties may face lawsuits for data breaches.
Page 31: Public Entity Liability
Public entities are susceptible to various liabilities, including wrongful convictions and abuse claims.
Page 32: Chapter 26 Starts - General Liability Loss Exposures
Definition of general liability in relation to business operations and policies used.
CGL (Commercial General Liability) policy and BOP (Business Owners Policy) are commonly purchased.
Page 33: Key Liability Exposures
Liability types covered:
Premises and operations
Products liability
Completed operations
Contractual liability
Contingent liability
Page 34: CGL Insurance Overview
CGL is prevalent for general liability; distinguishes between occurrence and claims-made policies.
Page 35: Coverage Details - Coverage A
Coverage A covers bodily injury/property damages from occurrences during the policy period, with exclusions.
Page 36: Coverage A Exclusions
Excluded instances include:
Intentional injuries
Contractual liabilities
Pollution, etc.
Page 37: Other Exclusions in Coverage A
Exclusions for property damage caused to the insured’s work or leased premises.
Page 38: CGL Policy Coverage A - Defense Costs
Includes defense costs and rights to investigate/settle claims.
Fire legal liability coverage also included.
Page 39: Coverage B: Personal and Advertising Liability
Coverage for legal liabilities from advertising injuries including slander, false arrest, etc.
Page 40: Coverage C: Medical Payments
Covers medical expenses incurred due to accidents on insured premises regardless of liability.
Page 41: Supplemental Payments in CGL
Supplemental payments may cover costs incurred by insurer and lost earnings up to a specified limit.
Page 42: Definition of Insureds in CGL
Definition includes various parties like owners, partners, and employees under different business entities.
Page 43: Insured Individuals Not Named in Policy
Coverage extends to volunteers, employees, and legally recognized representatives.
Page 44: Limits of Insurance in CGL
General aggregate limit includes total sum for various coverages combined.
Separate products-completed operations limit exists.
Page 45: Other Coverage Limits
Coverage for personal and advertising injury, and limits on damages per occurrence.
Page 46: CGL Limits Illustration
Adapted illustration showcasing CGL insurance limit impacts.
Page 47: CGL Conditions
Conditions apply to coverage details, and definitions of terms are included.
Page 48: Claims-Made Policy Differences
Claims-made policy differs in reporting terms and accuracies in claims estimation.
Page 49: Employment Practices Liability Insurance
Provides coverage against wrongful acts in employee management (e.g., harassment).
Page 50: Exclusions in Employment Practices Liability
Specific exclusions include criminal acts and prior litigation.
Page 51: Workers Compensation Insurance Overview
Coverage for job-related injuries without fault liability.
Page 52: Part One Workers Compensation
Covers all legally required compensation without limits under state laws.
Page 53: Part Two Workers Liability
Liability for injuries not compensated under Part One.
Page 54: Major Exclusions in Employers Liability
Exclusions address contract liabilities and intentional acts.
Page 55: Other-States Insurance Overview
Coverage applies for claims in unlisted states under certain provisions.
Page 56: Commercial Auto Insurance Overview
Business auto coverage for commercial vehicle operations.
Page 57: Auto Dealers Coverage Form
Specialized form for auto dealers covering liabilities from various operations.
Page 58: Aircraft Insurance General Rules
Application of negligence and strict liability to aviation accidents.
Page 59: Coverage for Private Aircraft
Policies cover property damage, bodily injury, and medical expenses.
Page 60: Physical Damage Insurance for Aircraft
Coverage types for damage to aircraft under various conditions.
Page 61: Commercial Umbrella Policy Overview
Provides broad protection against catastrophic liabilities, with required underlying coverage limits.
Page 62: Exclusions in Umbrella Policy
Extensive exclusions apply, particularly around intentional actions and professional services.
Page 63: Cyber Liability Insurance Overview
Coverage focuses on damages from data protection failures and various coverage options.
Page 64: Businessowners Policy Overview
Combines property and liability coverage tailored for small businesses.
Page 65: Professional Liability Insurance Overview
Insurance for professionals against lawsuits for substantial errors or omissions.
Page 66: Errors and Omissions Insurance
Coverage for negligent acts by professionals advising clients in various fields.
Page 67: Claims-Made Basis of E&O Policies
Specific exclusions apply, particularly regarding acts of dishonesty or conflict.
Page 68: Directors and Officers Liability Insurance
Financial protection for company directors and officers against mismanagement lawsuits.
Page 69: D&O Policy Coverage Details
Coverage slopes for damages due to wrongful acts, including reimbursement clauses.