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27 Cards in this Set

  • Front
  • Back
The basis of liability risk is torts. There are three types of torts:
-Intentional torts (bodily damage, personal injury, and property damage)
-Absolute liability situations (like owning a dangerous animal)
Four part test to determine negligence (tort):
1)Legal duty to use care
2)Failure to meet duty
3)Injury/property damage resulted
4)Proximate cause: "unbroken chain of events"

Damage awarded may be: special (for what can be itemized), general (for what can't), punitive
Package policy P&L coverage advantages:
-more complete coverage
-common expiration date
-lower cost than buying coverages separately
Section I of the HO-3
Coverage A: Dwelling (home value)
Coverage B: Other structures (10% of A)
Coverage C: Personal Property (50% of A)
Coverage D: Loss of Use (30% of A)

A and B are all-risk, C is named perils
Coverage D (loss of use) applies in three cases:
-If an insured peril damages the home and it cant be used
-Lost rent if a tenant can't use the rental area of home
-"prohibited use"
Section I: Loss settlement
Under coverage A and B, the insured receives the greater of two amounts:
-ACV of the loss...OR
-Insurance carried/80% of replacement x loss (coinsurance)

Losses under coverage C:
Section I conditions:
-Duties after a loss
-Appraisal clause
-No suit against the insurer
-Concealment or fraud
-Pair or set clause
-Mortgage clause
Section I exclusions:
-Earthquake, subsidence, sinkholes
-War, nuclear, neglect, intentional loss
-Floods, waves, tides, surface water
-Power failure off the premises
-"concurrent causation"
HO Section II, coverage E
-Coverage E: Personal Liability insurance

E: Provides up to 100k per occurrence. Applies to BI and property damage liability

Liability coverage "follows the insured." Insurer also pays legal defense costs IN ADDITION to the liability limit.
HO Section II, coverage F
Coverage F: Medical payments to others.

-provides up to $1,000 for medical payment to others. This coverage is intended to encourage the insured to get medical attention for someone else, to reduce coverage E costs
Section II (E and F) exclusions
-Motor vehicle liability
-Watercraft liability
-War, disease, abuse, drugs
Umbrella Policy
Provides protection against a catastrophic lawsuit or judgement.

-excess liability insurance
-broad coverage
-self-insured retention (SIR-deductible)
-reasonable cost
The Personal Auto Policy (PAP). A multiline, package policy. Consists of a declarations page, a definitions page, endorsements, and six parts:
Part A: Liability coverage
B: Medical payments to others
C: Uninsured motorists coverage
D: Coverage for Damage to your auto
E: Duties after an accident or loss
F: General provisions
PAP Part A
Liability Coverage

-Most important, and state mandated
-Insurer pays for BI and Property damage
-50/100/25 means BI per person/BI total/Property liability
PAP Part B
Medical Payments
-Small medical expense benefit
-Covers named insured and passengers
PAP Part C
Uninsured Motorists
-Pays compensatory damages
-Applies only if other driver is legally liable in three situations: uninsured drivers, hit and run drivers, and if the other drivers insurance company is insolvent
PAP Part D
Damage to your auto. Two optional coverage are provided:
-Collision loss: collision defined as "upset of the covered auto or impact with another vehicle or object"
-Other than collision: all risk coverage
PAP Part E
Duties after a loss
-Determine if there are injuries requiring medical attention. If there are injuries or property damage, call police
-Exchange information with other driver and contact agent
-Cooperate with your insurer in the claims process
Auto Insurance and Society: "No pay, no play laws"
If you want to sue, you must have liability insurance
Auto Insurance and Society: No fault auto insurance
-There is no good use of pure no fault
-Modified no fault: Uses a dollar, or verbal threshold, and you cannot sue unless your medical bills are high enough
-Add on plans: you retain the right to sue
Regulation of Insurance
Regulated at state level. Regulated because:
-Maintain insurer solvency
-Protect consumers
-Ensure reasonable rates
-Make sure coverage is available
Definition of Tort
A legal wrong for which the law allows a remedy in the form of money damages
Defenses against negligence (Part 1 of 4)
1. Contributory Negligence
– If the injured person’s conduct falls under the standard of care required for his/her protection, and such conduct contributed to the injury, the injured person cannot collect damages.
“No Defense” Negligence Situations. Two types include:
1. Absolute (Strict) Liability
2. Res Ipsa Loquitur – “the thing speaks for itself”
a. Ex. Dentist pulls wrong tooth.
b. Ex. Doctor amputates wrong leg
Defenses against negligence (Part 2 of 4)
2.Comparative Negligence
– If both the plaintiff (injured person) and defendant (negligent person) contribute to the plaintiff’s injury, the financial burden of the injury is shared by both parties according to their respective degrees of fault (percentage based).
Three types include:
a. Pure Rule – Can collect damages for injury even if you are negligent. (60% at fault = you receive 40% of damages) Note: Washington State uses this.
b. 50 Percent Rule – You cannot collect if you are 50% or more at fault (same as Pure Rule – percentage based damages)
c. 51 Percent Rule – You cannot collect if you are 51% or more at fault (same as Pure Rule – percentage based damages)
Defenses against negligence (part 3 of 4)
3. Last Clear Chance Rule
– Modification of “Contributory Negligence” where a plaintiff who is endangered by his or her own negligence can still recover damages from the defendant if the defendant has a clear chance to avoid the accident but fails to do so.
Defenses against negligence (part 4 of 4)
4. Assumption of Risk
– A person who understands & recognizes the danger inherent in a particular activity cannot recover damages in the event of an injury.