Chapter 3 – Liability Loss Exposures

 

Introduction

 

A Standard Homeowner's Policy in­cludes a very important protection, Personal Liability. This is known as Section II, Coverage E - Personal Liabil­ity.  This section states that “if a claim is made or a suit is brought against an insured for damages because of Bodily Injury or Property Damage caused by an occurrence, the company will pay up to the stated amount in the policy".  Our purpose in this chapter is to discuss the law and liability.  The way the law specifically treats Hom­eowners Policy protection will be covered in a later chapter.

 

Financial resources are diminished as the result of a claim for money damag­es because of injury or harm to another party.

 

Liability Loss Exposures have the fol­lowing elements:

 

• resources that may be exposed to loss.

• the possibility that a claim or mon­ey damages may be brought

• the financial consequenc­es that may result.

 

 

Resources Exposed to a Liability Loss

 

Liability Loss Exposures put all of an individ­ual's financial resources at risk of loss.  When a court orders an indi­vidual to pay liability damages, the amount of the damages is based on the loss to the injured party.  The individu­al's financial resources available to pay such damages are not the court's con­cern. As a re­sult, all of an individual’s savings and prop­erty are exposed to loss because of the possi­bility that the individual might have to liqui­date them to pay a large liability damages award.  In addition, courts have the power to attach a portion of an individual's as­sets, if necessary, to pay for liability damages.

 

The fact that all of an individual's assets, plus his/her future income may be required to pay for liability damages makes the possibility of a liability loss a particular threatening expo­sure.

 

Possibility of a Claim for Money Dam­age

 

For Liability Loss Exposures, the peril or cause of loss is the reason of a claim for money damages. Unless a claim for money damages occurs, an individual's financial resources will not be dimin­ished.  In addition, as soon as a claim for money damages is brou­ght, finan­cial resourcesbegin to be di­minished by the costs of investigating the claim and preparation to defend against legal action that may ensue.  Therefore, the making of a claim against an individual is the action that brings about a liability loss.

 

As the chapter evolves, we will be discussing the law and how it pertains to Liability Loss Exposure. Keep in mind that claims for liabil­ity damages are governed by Civil Law.  Civil Law deals with the rights and duties of citi­zens with respect to one another. The settle­ment of disputes between individu­als and the redress of wrongs commit­ted against individu­als are within the scope of Civil Law.  Several bases for claims of liability damages exist under Civil Law. Individuals are most likely to face claims arising out of Tort Liability, Contractual Liability and Statu­to­ry Liability.  We will discuss these later in the chapter.

 

Nature of Law

 

Because it is the legal system that en­forces obligations, an understanding of the law helps in recognizing Liability Loss Exposures. Com­plex legal ques­tions re­quire the professional expertise of an attorney. Some fundamental legal terms and concepts are essential knowl­edge for anyone dealing with Liability Loss Exposures or Liability In­surance.

 

Law exists in a civilized society to enforce certain standards of conduct. By placing limits on the freedom of some individuals, laws protect all other indi­viduals.

 

While the law generally makes the world a safer and more secure place, it also imposes certain responsibilities. Where there are rights, there are also duties.  Each individual must accept the constraints of the law in order to have the benefits of the law.  The law ac­complishes its objectives by holding people responsible for their conduct.

 

An important distinction exists in the Ameri­can legal system between Crimi­nal and Civil Law. While Criminal Law cases generally receive more headlines, insur­ance-related cases are more likely to involve Civil Law.

 

Criminal Law - Certain kinds of conduct so endanger the public welfare that society makes laws to prohibit them.  Examples: laws prohibit murder, rape, robbery, arson, fraud, theft, and driving while intoxicated.  Such offens­es are crimes.

 

A law-abiding citizen has no reason to fear the possibility of incurring Criminal Law penalties. This chapter concentrates on Liabil­ity Loss Expo­sures arising from Civil Law.

 

Civil Law - Actions that are not necessarily crimes can still cause considerable harm to other people.  Civil Law serves to settle dis­putes and to redress wrongs against individu­als.  In the absence of laws, a dispute between neighbors can turn into a never-ending feud.  Civil Law proce­dure enables individuals to enforce the rights that have been infringed upon by others.

 

Example: property rights occupy an important place in American law.  The old saying that a "man's home is his castle" suggests that proper­ty rights should have priority over most other objectives of the law.  When someone else infringes on prop­erty rights, such as trespass, vandalism, or

theft (even thought these are also crimes), the property owner may go to court to have the property rights re­stored.

 

In the same way, the law protects per­sonal rights. If someone inflicts bodily injury, in­vades the privacy of another, or harms the reputation of another person, the injured person may seek justice in court.  By protect­ing such personal rights, the law contributes to everyone's safety.

 

Civil Law enforces contract rights.  People are more willing to make agree­ments or contracts with one another when they know that those contracts are enforceable.  If two parties make a contract but one party does not honor it, the other party can ask the court to compel adher­ence to the contract or pay damages. This possibility of seeking justice from a higher authority pro­motes commerce by making con­tracts more reliable. Not surprisingly, in an­cient cities the market place and the law court were often side by side.

 

In a Civil Law proceeding, the aggrieved party must bring the case to court by hiring a law­yer, or by going to Small Claims Court where lawyers are not necessary.

 

Sources of Law

 

Although it is easy to see the benefits of the law, it is usually more difficult to determine exactly what the law on a particular point is.  There must be some source of law that the society accepts as bonding.  In the United States, there are essentially 4 sources of law: Constitutional, Statutory, Com­mon and Ad­ministrative Law all gov­ern American Soci­ety.  They differ, however, in their origin.

 

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Constitutional Law - The Supreme Law of the land is the Constitution. The Constitution specifies the structure of the Federal Govern­ment and outlines the respective powers of the legislative, executive and judi­cial branches of the government. The Constitution provides for a federal sys­tem of government in which pow­ers not specifically granted to the Federal Gov­ern­ment are reserved for the indi­vidual states. The Constitution guarantees to all citi­zens certain funda­mental rights, such as free­dom of speech, reli­gion, freedom from unrea­sonable searches and seizures, the right to trial by jury and the right to due process of law.

 

All other laws must conform to the Consti­tution.  The courts interpret the Consti­tution to decide constitutional issues that may arise.  If the Supreme Court decides that a particular law conflicts with the Constitution, that law becomes invalid.  The Supreme Court is the highest level of law.  Its deci­sion provides the final resolution of a disput­ed issue and lower courts must follow the Supreme Court deci­sion in judging future cases on the same issue.  Thus Constitutional Laws consists of the Con­stitution itself and all of the deci­sions of the Supreme Court that inter­pret the Constitution.

 

Each of the separate states also has a consti­tution establishing the powers of the state government.  Each state also has a Supreme Court to resolve legal conflicts in the state government and to hear appeals on matters of State Law.  However, states must follow the Constitution of the United States, and deci­sions of a state Supreme Court bearing on a constitutional issue may be ap­pealed to the Supreme Court of the United States.

 

Statutory Law - Legislatures at national, state and local levels enact laws or statutes to deal with perceived general problems.  At the na­tional level, Congress considers many pro­posed new laws each year.  Any member of the Senate or the House of Representatives may introduce a bill. It may be referred to a committee for study or perhaps for hearings before it is debated on the floor of the Senate or House.  If the bill receives a majority vote in both the Senate and the House and the Presi­dent signs it, it becomes a law. State Legisla­tures and Town Cou­ncils also make new laws in similar fashion. Collectively, these formal enactments of legislative bodies are referred to as Statutory Law.

 

Common Law - In contrast, the Common Law has evolved in the courts by the force of cus­tom. When a King's judges began hearing disputes in medieval England, they had little basis for their decisions except common sense and the prevail­ing notions of justice. Each decision became a precedent for simi­lar cases in the future.  Gradually, cer­tain principles evolved that the King's judges applied consis­tently to all cases. These principles became known as Case Law or Com­mon Law.

 

These common law principles guided Judges not only in England but also in the English colonies in America.  Thus, the English Com­mon Law heavily in­fluenced the American Legal System.  When neither Constitutional nor statuto­ry law applies, judges still rely on prec­edents of previous cases in reaching their decisions.  Legisla­tion now exists that modi­fies or replac­es Common Law principles, but Com­mon Law is still important in matters of legal liability.

 

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Administrative Law - A final source of law is the numerous federal, state and local govern­mental agencies that have regulatory powers derived from Statutory Law.  Examples in­clude the National Labor Relations Board, the Federal Trade Commission, the Environmen­tal Protection Agency, State Public Utility Commission and Local Zoning Boards.  These regulatory bodies issue detailed rules and regula­tions covering a particular public con­cern or relating to a particular industry.  Such rules, regulations, and decisions that imple­ment the objectives of Statuto­ry Law are called Administrative Law.

 

Other Elements of a Liability Loss

 

Statutory Law, Common Law, or Ad­ministra­tive Law could provide a basis for a finding of legal liability.  Howev­er, there must be some standard in the law against which the conduct of the purportedly liable person can be mea­sured. Thus, the law pays a critical role in liability losses.

 

While one party may or may not recog­nize its responsibility for some harm to another party, it is the legal process that enforces the liabil­ity.  The legal process confirms the responsi­bility for the harm and determines that appro­priate restitu­tion.  The factors involved in a Liability Loss include:

 

• a legal basis for claim of one party against another

• a definite injury or harm to the party making the claim

• some conduct by the other party for which the other party is responsible

• an agreement of the parties, or a judgment           of the court concerning the form or the amount of the restitution owned to the injured party.

 

The remainder of this chapter considers each of these elements of Liability Loss in greater detail.

 

Legal Rights of Recovery

 

For an injured party to have a Right of Recov­ery from another party, some principle of law must create a link between the two parties.  Often this link appears in the Law of Con­tracts.  Any law or legal principle establishes a relationship between the two parties may support a claim, but this discussion must be confined to the most common theories of recovery. A party that initiates the suit in court trial is known as the plaintiff.

 

Torts

 

Long ago the word tort meant any kind of wrongful act.  Although the word still covers a wide variety of wrongful acts, legal practice has narrowed the meaning.  Torts do not include acts such as "white lies" that may be moral­ly wrong but do not lead to legal ac­tion.  Crimes, wrongs against society rather than merely against a particular individual, differ from torts because Criminal Law deals with crimes and Civil Law does not.  Within the practice of Civil Law, there is a distinct body of principles.  With these exceptions, almost any other wrong may be a tort.  Therefore, Tort Law is that branch of Civil Law that deals with wrongs other than breaches of contract.

 

 

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A wrong usually leads to legal action only when some damage or injury re­sults and the

issue are who must pay for these consequences.  The concern of Tort Law is determining responsibility for injury. Although largely modified restated in statutes, Tort Law still rests partly on Common Law because courts determine responsibilities in such cases ac­cording to the prevailing theories of justice and the precedents of previous cases.  Like other areas of Common Law, a Tort Law evolves over time as courts sought solutions to new problems that arose in a changing society.  As expectations of safety and secu­rity rise and injuries become more costly, Tort Law becomes increasingly important as a means of determined responsibility for injury.

 

No matter how much sympathy for the victim of an injury, there must be some standard for assigning the responsibility to someone else if the victim is to be compensated.  Tort Law provides essen­tially 3 possible standards for find­ing legal liability.  If a tort is inten­tion­al, the liability for the consequenc­es follows.  If a tort is unintentional, negligence may be grounds for a find­ing of legal liability.  Some activities are so inherently dangerous that absolute liability for a resulting injury may exist even though no harm is intended and no negligence is invol­ved.

 

Intentional Torts - Deliberate acts that cause harm to an­other person, regardless of whether the harm is intended, are called intentional torts.  An Example is defamation of charac­ter, which includes both libel and slander.  Libel occurs when someone prints and distrib­utes an untrue defamatory

 

 

statement about another person.  Slander is a spoken defama­tory untruth about another person.  Liability judgment for libel tend to be greater than the amounts awarded for slander.

 

Negligence

 

While such Intentional Torts may lead to liability judgment, the greatest number of liability cases arise from negligence.  Negli­gence occurs when one fails to exercise the appropriate degree of care. It involves acting differently than a reasonably prudent person would under similar circumstances.  Tort Law enables injured parties to obtain compensation if they can demonstrate that someone else's negligence led to their injury.

 

Elements of Negligence - A liability judg­ment based on negligence depends on 4 ele­ments. The 4 elements of negligence are:

 

1.   a duty to act that is owed anoth­er person

 

2.   a breach of that duty

 

3.   the occurrence of an inju­ry

 

4.   an unbroken chain of events leading        to that injury.

 

Duty to Act - the first element of Neg­­ligence is that a person must have a duty to act that constitutes an obligation to another person.  A homeowner has a duty to keep icy sidewalks safe for visitors.

 

Breach of Duty - In order for a person to be held negligent, a breach of duty owed must occur. A breach of duty is the failure to exer­cise the degree of care expected of a reason­able per­son in that situation.  When

 

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entertain­ing guests in the homes, hosts have a duty to protect them from harm.  Not only must the host warn the guests of any danger, but the host must also take steps to see that guests are not harmed. Example: owing a large, aggres­sive dog and seeing that it is properly con­fined when guests arrive. Just telling the guests that the dog is vicious is not enough to meet the stan­dard of care required.  If the dog attacks a guest sitting in the living room, the host will be held responsible for the injuries.

 

In other situations, the same person might not be held responsible for the dog's attack. Ex­ample:  if the dog attacks an intruder who breaks a window and enters the home while the own­ers sleep.  Since reasonable people are not expected to protect intru­ders from harm, they have not breached their duty and are not responsible for the resulting injuries.

 

Injury - the third element of negli­gence is that definite injury or harm must actually occur to the claimant. There may be a legal duty to act and a breach of duty; but unless someone suffers injury, no recovery can be made based on negligence.

 

Unbroken Chain of Events - A finding of neg­ligence also requires that the breach of duty initiate an unbroken chain of events leading to the injury. The breach of duty must be the proxi­mate cause of the injury. Exam­ple: Jane injures a child alighting from a school bus, her careless driving is the proxi­mate cause of the injury.  When one passes a properly stopped school bus at a high rate of speed and hits a child, there is a direct casual relationship between the driver's action and the injury to the child.

 

 

Responsibility for Negligence

 

Individuals, business firms and other organi­zations may be held responsible for negli­gence. Generally, one expects the person whose conduct is negligent to be responsible for the consequences. This person may be called the Tortfeas­or, the wrong doer, or the negligent par­ty.  In addition to the per­son who actually commits the act, other per­sons or organizations may be held responsible for the wrongdoer’s action. This respon­sibil­ity is called Vicarious Liability.  It is also possible for two or more parties to be jointly liable.  If so, they are called Joint Tortfeasors.

 

Vicarious Liability - Vicarious Liability exists when one is held liable for the actions of another person. Such situa­tions extend liabil­ity and include not only the actual wrongdoer but also a person or organization responsible for the wrong­doer.  Were this not the case, busi­ness organizations could es­cape liability for negligence, since the person must act on behalf of a business organi­zation for that entity to perform any act.

 

Vicarious Liability often arises in busi­ness situations from the relationship between employer and employee. A person at work performing work-related activities is generally acting on behalf of the employer.  Therefore, the em­ployer is vicariously liable for the ac­tions of the employee.  Parents can be held vicariously liable for the actions of their children who are engaged in an activity on behalf of their parents. If the Green's 14 year-old son cuts the grass and loses control of a power mower which injured the foot of the White's 5 year-old daughter, the Green's could be held liable for their son's actions.

 

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Absolute Liability - Although most liability cases arise from negligence, liability under Tort Law is not entirely limited to cases of injury caused by deliberate or negligent con­duct.  In certain other situations as well, Tort Law may give an injured person a Right of Recovery. In these dangerous situations, there is absolute liability for any injury regardless of the intent or the careful­ness of the person held liable. The situation itself rather than the person's conduct become the standard for deter­mining liability.  A family's pet dog may be considered a dangerous animal if it has a history of attacking strangers or is a breed known to be vicious.  If so, Absolute Liability exists and a per­son at­­tacked by the vicious dog would not have to demonstrate negli­gence on the part of the dog's owner in order to claim restitution for injuries.

 

Absolute Liability also exists for owners of guns and other firearms.  They may be under lock and key but the owner might still be held liable for any inju­ries they cause.

 

Strict Liability - A similar but slightly differ­ent concept, often applies in cases of injury involving defective products. The Strict Lia­bility Doctrine eases the injured person's bur­den of proof in that he can recover from the manufacturer by showing that the harmful product was unreasonably dangerous, even if the manufacturer was not negligent.  So, Strict Liability can have almost the same effect as Absolute Liability in hold­ing someone respon­sible merely be­cause of the outcome.

 

Contracts

 

Tort Law enables an injured person to receive restitution from a wrongdoer be­cause the wrongdoer has breached a duty generally recognized in the law, such as the store's duty to maintain safe conditions for customers, or because the law generally holds a person to seek restitution because the other party has breached a duty voluntarily accepted in a con­tract.  A contract is a legal en­forceable agree­ment between two or more parties in which each makes some promise to the other.  If one party fails to honor the promise, the other may go to court to enforce the contract.  In such a case, it is the specific contract, rather than the law in general that the court interprets.  Two areas involving obligations that are contrac­tual in nature are the assumption of Liability under a Contract and Breach of Warranty.

 

Liability Assumed Under Contract - Parties to a contract might find it is conve­nient for one to assume the financial consequences of certain liabilities of the other. The party as­suming the liability may be closer to the scene, exercise more control over operations, or have the ability to respond to claims more efficiently. Example of this would be an owner of a building and a contractor made a contract in which the contractor accepts responsibility for some of the action of a subcontractor. If one of these specified ac­tions of a subcontractor injures another party then the contractor will pay the damages to the injured party. Such agreements are called hold harmless agreements.

 

Breach of Warranty - The Law of Contracts also governs claims arising from Breach of Warranty.  Contracts for sales of goods in­clude implied guaranties or promises by the seller. Example:  the seller warrants that the

 

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item is fit for a particular pur­pose. If Jane buys the hair conditioner recommended and sold by her beauti­cian, she relies on the implied warranty that the conditioner will be good to her hair.  If the conditioner damages her hair instead, the beautician may be held liable for a breach of warranty. The buyer does not have to prove negli­gence on the part of the seller.  The fact that the product did not work shows that the contract was not ful­filled.

 

Damages

 

For a Liability Loss to occur there must be some definite harm sustained by another person. Compensatory dam­ages are intended to compensate the victim for harm suffered. A damage award is usually an amount of money judge equal to the victim's loss.  That is the amount the party held liable will have to pay.

 

Occasionally, a court may award puni­tive damages as well because the con­duct of the wrongdoer is particularly outrageous. By mak­ing the wrongdoer pay more than the amount required compensating the victim, the court makes an example of the outra­geous conduct to dis­courage its repetition. The amount of liability loss includes, but can be greater than, the total losses sustained by the victims.

 

Bodily Injury

 

Bodily Injury is any physical injury to a per­son.  Bodily injury losses that the lia­ble party can expect to pay include hospital bills, physi­cian's fees, lost income and rehabilitation ex­penses of the injured party.  In legal terminol­ogy, payments covering such costs are called special damages.

 

In addition to these direct costs, the liable party may also be required to pay general damages for pain and suffering and loss of consortium.  Pain and suf­fering damages are awarded for the physical and mental pain and suffering that a person incurs because of the bodily injury. Ex­ample: when a person is badly burned on the face and arms, for gen­eral damages compensate the injured party for the physical pain and the potential disfig­urement as well as for mental suffering.  Damages for Loss of Consortium compensate someone for the loss of companionship be­cause of an injury to the spouse.

 

Property Damages

 

Property damage losses occur when a person caused direct or indirect damages (such as loss of use of property) to another person's property.  Property damage awards are nor­mally limited to the value of the damaged property, loss of income due to the damage, and additional expenses that occur because of the damage.

 

Other Kinds of Personal Injury

 

In addition to bodily injury, a person can be harmed in other ways, such as damage to one's reputation, whereas legal practices use "per­sonal injury" as a synonym for "bodily injury", insur­ance contracts use a more limited defi­nition of "personal injury" which in­cludes libel, slander, invasion of priva­cy, discrimina­tion, and malicious prose­cution (improper institution of criminal proceedings against another with mal­ice).  Any of these acts may cause harm to another person for which the perpetrator may be held liable.

 

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Defense Costs

 

Defense costs include not only the fees paid to lawyers but also all other ex­penses associated with the defense of a liability claim.  These expenses can include wages the defendant losses to attend and prepare for the trial, investi­gation expenses, witness fees and the cost of appeal bonds.

 

Liability Judgments

 

Whatever the legal basis of liability, the damage or injury, and the conduct or situation creating the liability, a Liability Loss becomes a definite legal obligation as a result of the legal process.  At any point in the process, the parties may agree on the extent of the liability and settle the matter accordingly.  If they do not agree, the injured party may seek a defini­tive judgment in court, which would then become the other party's legal obligation.

 

The Legal Process

 

The legal process provides a mechanism for an objective determination of liabili­ty.  The process protects the rights of persons injured through the actions of others and assures them of compensa­tion for their injury.  Because the legal process can be time-consuming and expensive, many liability cases are settled out of court.  Even people con­vinced of the merits of their case may be better off if they compro­mise early rather than fight a court battle through the end.

 

The Trial - During the trial, the plain­tiff (party initiating the suit) tries to prove that the defendant's (party named in the suit) behavior toward the plaintiff caused injury. 

 

Witnesses to the events, expert witnesses, and the plain­tiff's testimony may provide evidence.  The defendant has an opportunity to cross-exam­ine each witness and to present a defense.

 

One of the best defenses to a negligence claim is that the defendant did not commit a negligent act, but instead acted in a reasonable manner that is commonly accepted by society.

 

Second common defense invokes the legal Doctrine of Contributory Negli­gence. This de­fense asserts that the negligence of the plaintiff contributed to the injury. Example: in the case of an automo­bile accident, the defen­dant may have been speeding, and the plaintiff intoxicated and thus partly to blame for the accident.  The argument is that the defendant should not be held liable for the loss because a sober per­son in the same situation would not have been injured. The laws of many states now allow juries to apply the Doctrine of Comparative Negligence and assess damages in proportion to each party's degree of responsibility.

 

A third possible defense applies the doctrine of risk assumption.  In this defense, the de­fendant argues that the plaintiff knew of the risk in advance of the injury and therefore assumes the risk.  This defense might apply in a suit initiated by a hockey fan hit by a puck in the stands at a game. Team management might argue that it is common knowledge that pucks go into the stands and that the protec­tive shield around the ice ring is a reason­able amount of protection for the fans.  As long as the management of the team has taken this reasonable precau­tion to

 

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protect the fans, the fans as­sume the remaining risk.

 

Role of the Insurance Company

 

Under the terms of the Liability Insur­ance Contract, the insurance company agrees to pay the legal expenses in­curred in defending a case even if the suit is without merit and also to pay judgments covered by policy.  Thus the insurance company carries most of the burden of the lawsuit. The insur­ance company usually retains a local attorney who knows not only the law but also the way local juries and judge’s think and act. Outside attor­neys who have specialized expertise in certain areas of the law, or familiarity with the insur­ance company's strategy and prac­tices, may also be retained.  Since it has many dollars hinging on the outcome, the insurance com­pany often controls the entire defense process.  In most Liability Insurance Policies, the in­surer retains the right to decide whether to fight the claim or settle out of court.  If a trial leads to a judgment against the defendant, the insurer must decide whet­her to appeal the case to a higher court. In professional liability cases especially, defendants are more con­cerned about how the outcome affects their pro­fessional reputations while the insurance company is more concerned about the litiga­tion process.

 

Valuation of Liability Losses

 

The Valuation of Liability Losses is not nearly as exact as the Valuation of Prop­erty Losses.  If the parties do not reach a settlement out of court, the amount of the defendant's liability may be decided by the judge or jury.  In a bodily injury claim,

 

medical bills, lost in­come, extra expenses, loss of consortium, pain, suffering and punitive damages (where applicable) claim for damages, the jury can reject it, or accept some parts and reject others.  Once the jury leaves the courtroom to consider its verdict and the amount of any award, the process is out of the hands of the lawyers and the judges until the jury returns.  When the jury returns and announces its verdict and the jury's award is not in keeping with the facts presented, the respective parties may appeal the case to a higher court.

 

In cases where a death has occurred, the plaintiff’s attorney, through the use of an ex-pert witness, may try to calcu­late the eco­nomic value of the deceased person's life.  This calculation includes the present value of the deceased pers­on's earnings, fringe benefits and value of household services, the jury can accept or reject the testimony of the expert witness.

 

Property Damage Liability Claims can be evaluated more objectively than Bodily Injury Claims.  No damages for pain and suffering, loss of services, or loss of consortium are in­volved.  However, these can still be dispute over the fair market value of the property at the time of loss and the amount of damage that actually occurred.  The value of fine arts or collectible items may be particu­larly diffi­cult to judge.  The facts re­garding the value of the property dam­age are submitted to the jury for its judgment.  It may accept or reject the arguments of the plaintiff's position and make the award as it sees fit.  General­ly, however, there are fewer disputes over Property Dam­age Liability Claims than Bodily Injury Claims.

 

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Chapter 3 - Questions

 

 

1.   In a Homeowners Policy, Section II -      Coverage E is known as:

 

A.  Property Protection

B.  All Risk Protection

C.  Personal Liability

D.  All of the above

 

2.   If two parties do not agree on the fact or the extent of one's liability to the other, who decides?

 

A.  the defendant

B.  the injured party

C.  the insurance company

D.  the court

 

3.   What law deals with wron­gs other than Breaches of Contract?

 

A.  Tort

B.  Defamation

C.  Contract

D.  None of the above

 

 4.   Which of the following is/are ele­ments of negligence?

 

A.  Duty to act that is owed to another person

B.  Breach of that duty

C.  Occurrences of an injury

D.  All of the above

 

 

 

5.   Damages that are intended to com­pensate the victim for harm suffered are called:

 

A.  Punitive damages

B.  General damages

C.  Compensatory Damages

D.  All of the above

 

 

 

 

 

     ANSWERS

 

1.         C

2.         D

3.         A

4.         D

5.         C