Underwriting General Liability - Products And Completed Operations

Front 1

how does tort reform efforts seek to control products liability claim costs

Back 1

by capping damages, limmiting standards to which products are held, and discouraging frivolous suits

Front 2

there are 3 sources of PL (Product Liability) law

Back 2

1. breach of contract
2. strict liability
3. negligence

Front 3

breach of warranty

Back 3

action in breach of contract resulting in BI and PD

Front 4

express warranty

Back 4

guarantees the product's quality or performance and is one of the bases of the product's sale. warranty need not appear in writing

Front 5

implied warranty

Back 5

court-imposed obligation. carry greater weight in lawsuit bc express warranty is based on statements the seller has made about product while implied exists regardless of agreement or understanding

Front 6

implied warranty of merchantability

Back 6

requires merchants to provide goods that are safe and reasonably fit for their intended purpose.
doesnt apply to non-merchants who have no knowledge about the goods they sell

Front 7

implied warranty of fitness for a particular purpose

Back 7

requires the seller to provide goods that are fit for their intended use. warranty applies to non-merchants

Front 8

strict liability in tort

Back 8

legal actions are based on the selling of any unreasonably dangerous product in a defective condition

Front 9

privity of contract

Back 9

the need to establish a contractual relationship between buyer and seller

Front 10

products may be defective in 3 ways

Back 10

1. due to faulty manufacture or assembly
2. due to unsafe design - including concealed defects and inadequate safety guards. in general, the state of the art at the time of manufacture governs design and safety standards
3. due to the manufacturer's failure to warn of the product's inherent and foreseeable dangers

Front 11

plaintiff must prove these 3 elements to bring successful suit

Back 11

1. product was defective when it left the manufacturer or supplier
2. the defect made the product unreasonably dangerous
3. the defective product was the direct cause of his injury

Front 12

the restatement of torts rule

Back 12

extends protection to the injured ultimate user or consumer (such as when the ultimate buyer makes a gift of the product)

Front 13

the strict liability applies to

Back 13

any person who engages in the business of selling a product, including manufacturers and distributors, wholesalers and retailers, bailors, lessors, builders, and contractors

Front 14

strict liability

Back 14

protect the injured ultimate buyer of a defective product and any injured nonusers

Front 15

negligence

Back 15

legal actions are based on violation of the duty to safely:
1. design the product
2. produce the product
3. test and inspect the product
4. clearly warn of and instruct the product user regarding non-obvious dangers

Front 16

what are the 11 defense to product liability

Back 16

1. state of the art - prove the product was as safe as it could be made when it was made
2. compliance w/ product specification - prove the product was designed according to the 3rd party's specifications, and that those specs showed no obvious defects
3. open and obvious dangers - prove the injury was caused by a common, open, and obvious propensity of the product(knives can cut;gasoline is flammable)
4. plaintiff's kmowledge - prove the buyer's knowledge of the product at least equaled that of the manufacturer, relieving the mamufacturer of the duty to warn the buyer
5. assumption of risk - prove the buyer contributed to the injury by knowingly using a defective product
6. misuse - prove the buyer used the product abnormally
7. alteration of product - prove the defect was caused by post-sale modification of the product
8. written disclaimer - prove the seller provided the buyer w/ a written disclaimer for responsibility for defects and their resulting injuries.
9. post-accident product change - plaintiff cannot use subsquent changes to the manufacture of the product as proof that the product he brought was defective (and hense needed alteration)
10. existence of a middleman - prove the product defect was caused by the distributor's or seller's unforseeable actions or omissions
11. allergy and susceptibility - prove the product warned the buyer of possible allergic reactions or the percentage of allergice users of the product was so small that warning wasnt needed

Front 17

disclaimers are only effective when the plaintiff

Back 17

1. is the buyer
2. was fully aware of the disclaimer at the time of purchase

Front 18

general aggregate limit

Back 18

This aggregate limit is the most the insurer will pay for all sums as damages because of bodily injury, property damage, personal and advertising injury except for those sums paid as damages because of bodily injury or property damage included within the products-completed operations hazard. The products-completed operations hazard is defined in the policy and a separate aggregate limit applies to such claims or suits.

Included within the general aggregate are damages paid under insuring agreements Coverage C—medical payments and Coverage B—personal and advertising injury.

Front 19

products/completed operations aggregate limit

Back 19

applies independently of the general aggregate limit. Sums paid under the general aggregate limit do not reduce the products-completed operations aggregate limit and vice versa. Consequently, under the CGL policy, an insurer's total liability or exposure in a policy period policy is the sum of the two aggregate limits.

Front 20

personal and advertising injury limit

Back 20

This limit is independent of the each occurrence limit. Hence, it is possible that an insurer may be required to pay both the personal and advertising injury limit and each occurrence limit.

The personal and advertising injury limit applies not by offense, but separately to each person or organization that sustains damages because of a covered offense or offenses. However, regardless of the number of persons or organizations claiming damages from a covered offense, or regardless of the number of offenses claimed during the policy period, the insurer is obligated to pay no more than the general aggregate limit.

Front 21

each occurrence limit

Back 21

the most the insurer will pay for BI, PD and medical expenses incurred as a result of any one occurrence (event)

Front 22

Aggregate Limits

Back 22

An aggregate limit is the most the insurer will pay during the policy period. Once an insurer is legally obligated to pay the full amount of the aggregate limit (either by judgment or settlement), the insurer has no further obligation to the policyholder during the remainder of the policy period for any subsequent claims or suits that are otherwise covered by the policy and that would be payable under that aggregate limit.

Front 23

Damage to Premises Rented to You Limit

Back 23

is the most the insurer will pay for damages due to PD to premises rented or temporarily occupied by the named insured w/ the owner's permission

Front 24

medical expense limit

Back 24

the most the insurer will pay for all medical expeses due to BI sustained by each person

Front 25

underwriting consideration for completed operations hazards

Back 25

1. products and completed operations hazards
2. CGL Policy exclusions
3. products liability underwriting factors and their information sources
4. completed operations underwriting factors

Front 26

the products hazard includes all BI and PD arising out of "your product" when:

Back 26

1. occurring away from premises owned or rented by the insured (on premises loss is covered under premises and operations coverage)
2. occurring after the product is in someone else's phyiscal possession

Front 27

"your product"

Back 27

goods or products other than real property that are manufactured, sold, handled, distributed, or disposed of by the named insured, those trading under the named insured's name, or a person or org owned by the named insured.
does not include restaurants and other businesses that sell food and drink to be consumed on the premises

Front 28

products/completed operations hazared redefined

Back 28

modifies the hazard to include BI and PD caused by the insured's products frm the time the insured relinquishes physical possession

Front 29

the completed operations hazard includes all BI and PD arising out of "your work" occurring

Back 29

1. away from premises owned or rented by the insured (on premises loss is covered under premises and operations coverage)
2. after the work has been completed or abandoned
-- work is completed when
1. the contracted work is finished
2. work at one contracted site is finished
3. part of the work at a contracted site has been put to its intended use

Front 30

"your work"

Back 30

includes work or operations performed by the named insured or by others on the insured's behalf including any furnished materials, parts, or equipment.
includes any warranties or representations made as to the fitness, quality, durability, or performance of the work

Front 31

exclusion of damage to the named insured's product

Back 31

excludes PD coverage to "your product" arising out of the product itself or any part of the product.
this exclusion applies even if a part of the product damages the rest of the product or if the underlying cause of the damage is attributable to another firm (manufacturer, assembler, or suppier of a component)

Front 32

definition of property

Back 32

1. physical injury to tangible property, including loss of use
2. loss of use of tangible property that is not physically injured

Front 33

exclusion of property damage to named insured's work -- aka the injury to work performed exclusion

Back 33

excludes PD to "your work" that
1. arises out of the work itself or any part of it
2. is included in the products-completed operations hazard
this exclusion applies only to the products-completed operations hazard, doesnt apply to insured's subcontractors' work