Commercial Casualty I - National...

1

Commercial Casualty I

Course Introduction p1

Welcome

Insurance and risk professionals today need learning choices from many sources. As time and economic pressures bear down on everyone, The National Alliance continues to push forward with excellent online programs, carefully designed to fulfill your professional development needs. In the pages that follow, be sure to read and understand the requirements for completing your course. If you have any questions, you may contact us via the link on the bottom navigation bar. I hope you enjoy your journey into online learning. Thank you for choosing a National Alliance online course!

William T. Hold, Ph.D., CIC, CPCU, CLU President


Commercial Casualty I – CGL & AI Course Print 11.22.2013

2


3


4


5

Certified Insurance Service Representatives (CISR) Most students who select this course have already made the decision to achieve the Certified Insurance Service Representatives (CISR) Designation - the best recognized credential for insurance service representatives and other insurance professionals in the industry today. The National Alliance for Insurance Education & Research gave recognition to the first CISR designee in 1987. Today, over 28,000 insurance professionals proudly wear the CISR pin. You can learn more about it by using the link provided below – maybe it’s right for you!

https://www.scic.com/courses/CISR

Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.Error! Not a valid embedded object.

Course Introduction Page 4

Course Home Page Use the home symbol on the bottom left navigation bar to access this page during your course. Links to instructions and other helpful information are provided on this page. Help Desk Hours: 8:30 am to 5:00 pm Central Time Phone Contact: 800-633-2165


6

Copyright. The Society of Certified Insurance Service Representatives, Incorporated. All rights reserved. This material includes copyrighted material of ISO Properties, Inc. with its permission. This course or any part thereof may not be reproduced, copied, republished, uploaded, posted, transmitted, or distributed in any form or by any means or stored in any information retrieval system without the express written consent of the National Alliance for Insurance Education and Research and the Society of CISR. All trademarks and services marks are proprietary to The Society of CISR, or its affiliates or licensees.


7


REQUIRED READING FOR FLORIDA RESIDENTS ONLY:

An entity that is required to be licensed or registered with the Florida Office of Insurance Regulation but is operating without the proper authorization is identified as an unauthorized insurer. All persons have the responsibility of conducting reasonable research to ensure they are not writing policies or placing business with an unauthorized insurer. Any person who, directly or indirectly, aid or represent an unauthorized insurer can lose their licenses or face other disciplinary sanctions. Please see section 626.901, Florida Statutes, to read the laws. Lack of careful screening can result in significant financial loss to Florida consumers due to unpaid claims and/or theft of premiums. Under Florida law, a person can be charged with a third-degree felony and also held liable for any unpaid claims and refund of premiums when representing an unauthorized insurer. It is the person’s responsibility to give fair and accurate information regarding the companies they represent.

Welcome to CISR Commercial Casualty I (1IC) p1 Welcome! CISR Commercial Casualty I - Legal Liability, CGL & Additional Insureds

Thank you for choosing the Certified Insurance Service Representatives (CISR) Commercial Casualty I - Legal Liability, Commercial General Liability (CGL) & Additional Insureds course. Insurance professionals working in commercial lines may find themselves:

• describing a company product to a new producer, • describing coverages to a customer, • analyzing existing policies for a large commercial account that needs to increase coverage, • handling claims and, • pursuing sales leads.

More than ever, they need to increase their technical knowledge of commercial casualty coverages. The CISR Commercial Casualty I - Legal Liability, CGL & Additional Insureds Course offers an excellent overview of the CGL Policy.


8

Course Study and Exam Preparation

Have you ever thought about how you learn? The study aids listed below will help you determine your progress and test your understanding of concepts and examples presented in the course.

Learning Objectives:

Learning Objectives are designed for managing your own learning. The learning objectives for the course are listed at the beginning of each topic. The learning objectives are indicated throughout the course pages as well.

At the end of the course, you will have the opportunity to read the learning objectives again, and see how confident you feel about each one.

Self Quizzes

Self quizzes are another learning management tool. You are required to pass each self-quiz with a score of 70 or above before moving forward in the course, and you can launch a self-quiz as many times as needed.

To print the score page of your self- quiz, click on Assessment Results, then right click on the page. The Assessment Results page makes an excellent study aid.

Glossary

Glossary terms and definitions are critical to insurance professionals, and a key study aid for your online course. To define a term, click on the Glossary link above. Definitions of newly introduced terms will also be included on the course pages.

Knowledge Checks

Knowledge Checks are application level questions.

By attempting to apply the concepts of the course, you will better prepare yourself for the final exam. Make sure you attempt each knowledge check in the course.

Course Mentor

And don't forget to email the Course Mentor with your questions about the curriculum.

Our faculty members are distinguished producers and risk managers who currently work in the insurance industry. The mentors are happy to explain and clarify the concepts in the course.


9

They will return your email on or before the next business day.

Be sure to use the Frequently Asked Questions (FAQ) Page to review guides for commonly asked questions.

ISO Forms v. Company or State Specific Forms

Insurance companies often use policy forms other than the ISO Commercial Casualty Exposure forms. These policies may incorporate language similar to the ISO Forms in their contract and endorsement language. You must also be aware that state specific forms often contain different provisions than the ISO Standard Forms.

Be sure to look for differences between the ISO Forms which we study in this course, and the company specific or state specific forms that you use in your job.

Forms used in this course are located by clicking on the Forms Library link. We also present a link to the forms used at the beginning of each lesson.

Course Objectives Overview

This course consists of five lessons:

1. Essentials of Legal Liability 2. CGL Introduction 3. Commercial General Liability Coverage Parts 4. CGL Other Provisions 5. Additional Insureds

Each lesson is further broken down into topics. In each topic, you will have content to read, graphical material to view, and self-quizzes to test your comprehension of important points. You may link to the final exam after completing all of self quizzes in the course with a score of 70 or above.


10

Lesson 1 Essentials of Legal Liability

Lesson 1 Legal Liability Intro p1 (1IC)

In the CGL Policy we will cover later in this course, the greatest majority of coverage arises from an insured person's legal liability. Legal liability is a responsibility or obligation to others, which the courts recognize and enforce. Legal liability is the event that triggers (initiates) coverage in most of the policies we will discuss. Legal liability can come from many exposures. There are also several types of legal liability to which an insured person can be exposed to. In addition, different types of damages (amounts of money) may be assessed when legal liability exists.


Lesson 1

Topics of Discussion

In this lesson we will focus on liability exposures. It is important to learn what they are, before learning if and how they are covered by an insurance policy. Some exposures are covered by the CGL Policy, and some are not. As you go through the lessons, make sure you remind yourself about the difference between "exposures" and "coverages". In Lessons 2 through 5, we will study how the Commercial General Liability (CGL) provides coverages for many of the exposures we are about to study.

This lesson will consist of four topics:

1. Types of Liability 2. Direct and Vicarious Liability 3. Types of Damages 4. Liability Exposures


Lesson 1: Learning Objectives


http://onlinedev.scic.com/dev/NewLinx/RunThruCluster.php

11

After completing this lesson, you will be able to:

1. Define three categories of legal liability: tort, statutory and contractual. 2. Explain four types of tort liability and give an example of each. 3. Name the four requirements of a negligent tort. 4. Explain the concept of direct liability. 5. Define vicarious liability, and give examples of relationships where vicarious liability may be

created. 6. Name and describe the types of damages that may be awarded in a civil court case. 7. Identify and explain the sources of legal liability exposures.

Forms Used In This Lesson: None


12

Lesson 1 Topic A - Types of Liability

Lesson 1 Topic A Types of Liability p1 (1IC)

Learning Objective: Define three categories of legal liability: tort, statutory and contractual.

Legal liability is "a responsibility or obligation to others, which courts recognize and enforce." In general, failure to meet this duty often results in the imposition of monetary damages. The three types of legal liability that we will cover in this lesson are:

• Tort Liability • Statutory Liability • Contractual Liability


Tort Liability

Learning Objective: Explain four types of tort liability and give an example of each.

Many insurance policies that provide insurance protection for the legal liability of insureds refer to tort liability. A basic definition of tort is a civil legal wrong against another for which the courts often assess monetary damages against the wrongdoer. Tort liability is imposed by common law, that is, law that has been developed through the application of court decisions over time. You need to be familiar with four types of torts:

1. Negligence 2. Intentional Torts 3. Strict Liability 4. Absolute Liability

We will go into more detail of the four types of tort liability on the pages that follow.


1. Negligence

Learning Objective: Name the four requirements of a negligent tort.


13

A basic definition of negligence is the failure to act as a reasonable person would under the same or similar circumstances. Failure to do so can result in a negligent tort. You need to remember that four elements or components are required for a negligent tort:

1. There must be a duty owed by the negligent party to another party. 2. There must be a breach of that duty. 3. An actual injury or loss must occur. 4. There has to be a close cause and effect (proximate cause) relationship between the breach of

that duty and the injury or loss.


Learning Objective: Name the four requirements of a negligent tort.

Four Elements of Negligence

1. A duty owed: A Person has a duty to operate an automobile safely. 2. Breach of Duty: The person runs a red light. 3. Proximate Cause: His/her action causes a collision. 4. Damages: The result is property damage to the other car and bodily injury to the other driver.


2. Intentional Tort


An intentional or voluntary act where the person or organization committing the act is expressly or implicitly deemed to have possessed intent or purpose to injure. The person or organization committing the act can be held legally liable for that injury or loss. Examples include:

1. Libel 2. Slander 3. Wrongful entry or wrongful eviction 4. Assault and/or battery 5. Wrongful detention 6. False arrest 7. Copyright infringement, trademark infringement, etc.


14


3. Strict Liability


Strict liability is a concept applied by the courts in product liability suits in which a manufacturer, distributor or seller is liable for any and all defective or hazardous products that unduly threaten a consumer's health and safety. Unlike the case of negligence previously discussed, the element or component of proximate cause is not applied. All that has to be proved is that the product that caused the damage was defective and the defect rendered that product unreasonably dangerous. A product may be defective because of a defect in manufacture, design or failure to adequately warn of a hazard involved in the foreseeable use of the product. The manufacturer, distributer or seller may have exercised reasonable care in the manufacture, distribution or sale of the product.


Examples of Strict Liability Losses


Example 1: A football player was injured while wearing a football helmet. The fact that the helmet did not do what it was intended to do (protect from head injury) was cause for strict liability. A product is defective in design if it fails to perform as safely as an ordinary consumer would expect when it is used in an intended or reasonably foreseeable manner.

Example 2: A 300 pound man was injured when a ladder he was using collapsed. The ladder was manufactured for maximum capacity of 250 pounds. The court found strict liability on the part of the manufacturer for failure to place a warning on the ladder for use by individuals over 250 pounds. A product is defective if the use of a product in a manner that is reasonably foreseeable by the manufacturer involves a substantial danger that would not be recognized by the user and the manufacturer knew of the danger but failed to provide an adequate warning.


15


4. Absolute Liability


Absolute liability is liability without regard to fault. Absolute liability applies where certain activities create such a serious risk of harm that it is justifiable to place liability for any injury or damage on the person or organization engaging in the activity, even when the person or organization has taken every precaution to prevent or reduce any type of injury or damage. All that has to be proved is that an injury or damage occurs because of the activities. Examples of absolute liability include:

• Explosive or blasting operations • Dangerous animals • Hazardous material operations


Tort Liability Continued


Click on Start to review our study of Tort Liability.

Types of Tort Liability

Negligence

Intentional Torts

Strict Liability

Absolute Liability

Negligence

Example: If a driver runs a stop sign, the driver breached a duty owed. But unless they cause injury or property damage, there is no negligent tort.

Intentional Torts


16

Examples include:

• Libel • Slander • Wrongful entry or wrongful eviction • Wrongful detention • False arrest • Copyright infringement, trademark infringement

Strict Liability

Example: Product liability - A container advertised to hold toxic chemicals leaks when the consumer puts the chemical in the container.

Absolute Liability

Examples:

• Explosive or blasting operations • Dangerous animals (whether known to be dangerous or not) • Hazardous material operations

Please complete the knowledge check found at Lesson 1 Topic A Types of Liability p10 (1IC).


Statutory Liability


Statutory liability is liability arising out of specific rules or laws (statutes) enacted by a legislative body providing direction or prohibition. The existence of these statutes subjects a business owner to liabilities imposed by the provisions of the laws. Statutes override common law.

Examples of Statutory Liability

• Workers Compensation Statutes • Dram Shop or Liquor Liability Statutes • Environmental Protection Statutes • Americans With Disabilities Act, related rulings and state statutes


17

• Employment Liability through statutes and EEOC rulings


Contractual Liability


A contract is an agreement between two or more parties, which creates an obligation to do or not to do a particular thing. Often in contracts, one party assumes the financial consequences of certain liabilities of another.

Later in this course, we will see that not all contractual assumptions of liability will be covered by insurance policies. The policies will grant coverage for "insured contracts" only.

Assumption of responsibility for liability of another

Assumption of responsibility for the liability of another is commonly referred to as hold harmless and/or indemnity agreements.

Parties commonly involved in a hold harmless and/or indemnity agreement:

1. Lessor-Lessee 2. Owner-Contractor 3. Contractor-Subcontractor 4. Manufacturer-Distributor

Breach of Contract

A breach of warranty claim is one example of a breach of contract action that affects the exposures of many types of businesses.

A warranty is an assurance made by the seller of goods or provider of services, either express or implied that references the quality or fitness of the goods or services and is relied upon by the buyer of the goods or services.

Breach of warranty claims are claims for breach of contract.


Contractual Liability Continued


18


Contractual Liability Examples

When a tenant signs a lease, he or she may agree to pay for any judgment assessed against the landlord because of activities at the rented premises.

Another common example can be found in an equipment lease. When you sign a lease for a phone system or computer equipment, you agree to assume the costs of any judgment assessed against the owner of the equipment for losses arising out of your use of the equipment.

When an individual buys a hammer, there is an implied warranty that the hammer is fit for the ordinary purpose for which a hammer is used. If the first time the individual uses the hammer, a part of the hammer breaks off and injures the individual's eye, and action for breach of warranty could result.

In this example, the party may be liable for breach of warranty, a breach of contract. However, not all breach of contract claims are provided insurance protection by most liability policies.


This chart is another way to illustrate the types of legal liability. Click on each of the bolded terms for a review.

Tort

Negligence: There are four requirements of a negligent tort. There must be:

1. A duty owed 2. A breach of duty 3. Proximate cause 4. Damages

Intentional Torts:

An intentional tort is an intentional or voluntary act that can result in injury or loss to another party.

Examples of intentional torts include: libel, slander, wrongful entry or wrongful eviction, assault and/or battery, wrongful detention, false arrest, copyright infringement and trademark infringement.

Strict Liability: For strict liability, all that has to be proved is that a defective product injured someone or caused some damage. Examples of strict liability include: defect in design, defect in manufacturer and failure to warn.


19

Absolute Liability: Absolute Liability applies when conditions or activities are inherently dangerous. Examples of absolute liability include: explosive or blasting operations, dangerous animals and hazardous material operations.

Statutory

Imposed by Statutes and Regulations:

Examples: Workers Compensation Statutes and Americans with Disability Act (statutes and regulations and related rulings).

Contractual

Assumption of Liability:

Example: A common contractual assumption of the liability of another would be renting equipment and the contract states you agree to assume the costs of any judgment assessed against the owner of the equipment for losses occurring while you are using the equipment.

Some liability insurance policies may provide insurance protection for the assumption of responsibility of another. Often, the coverage provided is limited to "insured contracts", as defined.

Breach of Contract: Insurance protection for breach of contract under liability insurance policies is typically limited to breach of warranty type claims.


20

Lesson 1 Topic B - Direct and Vicarious Liability

Lesson 1 Topic B Direct & Vicarious Liability p1 (1IC)

Learning Objective: Explain the concept of direct liability.

The majority of liability claims involve the tort liability of the person or organization. In general, tort liability can be triggered from two types of actions. They are:

1. Direct Liability results from your own conduct. 2. Vicarious Liability results from the conduct of others.


Direct Liability

Learning Objective: Explain the concept of direct liability.

Direct liability results from the conduct of a person or organization that is responsible for injury or property damage to another. Example:

Deem's Market, Inc. fails to clean up a food spill in one of its grocery aisles, and a patron slips on the food, falls and breaks several bones. The claimant sues Deem's Market, Inc. because it directly caused the injury.


Vicarious Liability

Learning Objective: Define vicarious liability, and give examples of relationships where vicarious liability may be created.

Vicarious liability is the liability of one party based upon the liability of another. It is said that liability is imputed (transferred from one party to the other). Many times the person or organization is not actively involved in the conduct that causes injury or damage, and, in fact, may have actually discouraged it or tried to prevent it. However, because of the nature of certain relationships, the conduct of others can create vicarious liability for the person or organization.


21

Example: While delivering groceries, an employee of Deem's Market, Inc. causes an auto accident in which three people are injured. The injured parties bring a claim against the employee who directly caused the accident, but they also bring a claim against Deem's Market, Inc., because Deem's Market, Inc. can be held vicariously liable for the actions of its employees done within the scope of their employment.


Vicarious Liability continued

Learning Objective: Define vicarious liability and give examples of relationships where vicarious liability may be created.

Employer/Employee: Legal doctrine has held that the employer is responsible for injury or damage to another resulting from the acts of an employee committed within the scope of their employment. The employee can be held individually liable for his/her acts, however, in the real world it is the employer, more times than not, who has the assets and who will bear the financial burden of the employee's acts.

Principal/Agent: This is similar to the employer/employee relationship. However, the principal is liable only for acts of the agent while the agent is performing acts directly related to the relationship. A real estate company could be legally liable for acts or omissions of its independent realtors while acting on behalf of the company.

Owner/Manager: A property owner could be legally liable for the acts or omissions of its management company. Like the principal/agent relationship, the owner can be liable only for acts performed by the manager directly related to the relationship.

Owner/Contractor – Contractor/Subcontractor: An owner/contractor may be held liable for the acts of its contractor/subcontractor. However, generally the owner/contractor is not held legally liable for the conduct of a subcontractor unless the subcontractor is performing inherently dangerous acts or the owner/contractor was negligent in choosing them. This is not as automatic as the employer/employee relationship.

Please refer to the end of Lesson 1 Topic B to complete Self Quiz 1 at this time.


22

Lesson 1 Topic C - Types of Damages

Lesson 1 Topic C Types of Damages p1 (1IC)

Learning Objective: Name and describe the types of damages that may be awarded in a civil court case.

In liability, we refer to the money awarded in a suit or claim as damages. There are two basic types of damages that are awarded in liability claims. They are:

• Compensatory damages • Punitive or exemplary damages


Compensatory Damages


Compensatory damages are sums of money that will, as far as possible, compensate for the loss. There are two types of compensatory damages:

Special Damages: Specific dollar amounts that cover specific costs. Examples: Medical bills, lost income, rehabilitation expenses, repair or replacement of property, loss of use of property, etc.

General Damages: Subjective dollar amounts that cover intangible losses. Examples: Pain and suffering, disfigurement, loss of consortium, etc.


Punitive or Exemplary Damages


Punitive or exemplary damages are sums of money, more than are required to compensate for loss, which are imposed in order to punish wrongdoer conduct now and deter such conduct in the future. Statutes may restrict the amount of exemplary or punitive damages that can be recovered. State law may also restrict liability policies from paying for exemplary or punitive damages. In addition, some liability


23

policies have exclusions that prohibit paying for exemplary or punitive damages. Example: In addition to compensatory damages, the defendant is ordered to pay $100,000 in punitive damages for texting while driving.

Please complete the knowledge check found at Lesson 1 Topic C Types of Damages p4 (1IC).


24

Lesson 1 Topic D - Legal Liability Exposures

Lesson 1 Topic D Legal Liability p1 (1IC)

Learning Objective: Identify and explain the sources of legal liability exposures.

Our commercial insureds face various types of risks every day. Business entities - whether individuals, partnerships, or corporations, are subject to many exposures that can create legal liability. The owners or individuals responsible for the operation of the business do not always recognize every exposure. You can help your client to identify some of these exposures. Common business exposures that can lead to legal liability are:

• Premises • Operations • Products • Completed Operations • Ownership, Maintenance, or Use of Autos • Ownership, Maintenance, or Use of Other Conveyances • Employing Workers • Liquor • Environmental Impairment • Professional Activities • Bailee Liability


Premises Liability


Legal liability results out of an injury and/or damage due to the ownership, maintenance or use of a location. The exposure applies to owners, landlords and tenants and is generally confined to a specific location(s), like the address of the business. Examples:

• A customer slips and falls in a store due to water on the floor. • A fire accidentally started by an employee damages property belonging to the business next

door.


25


Liability Arising from Operations


Legal liability results when injury and/or damages arises out of business activities (such as construction, processing, manufacturing, repairing, or loading and unloading goods, etc.) which are necessary and incidental for conducting business. The exposure can be at the premises or at other locations where the business activity occurs. Examples:

• A tree-removal contractor causes damage to power lines when removing tree limbs. • During the loading process, a load of boxes falls off a conveyer belt injuring a customer.


Products Liability


Legal liability results when injury and/or damage arises out of defects in product design, manufacture, or the failure to warn. The exposure applies to the use of a product made or sold by the business. This exposure begins after the sale and as soon as the product has left the premises. Examples:

• A table collapses because improperly sized screws were used in construction, causing damage to a customer's computer.

• A manufacturer fails to warn of choking danger associated with small parts on a toy, and a child chokes on a part when given the toy.


Liability Arising from Completed Operations


26


Legal liability results when injury and/or damage arises out of defective or improper workmanship. The exposure applies to the insured's work. This exposure begins once the operations have been completed and the insured leaves the work site. Examples:

• Several weeks after an electrician uses the wrong size wire for a repair, a resulting fire damages the customer's building.

• An employee improperly installs a hot water heater. Three days later the building is flooded with gallons of water.


Liability due to Ownership, Maintenance or Use of Automobiles


Legal liability results when injury and/or damage arises out of the ownership, maintenance or use of an auto, including entrustment and/or supervision. Almost every commercial client has this exposure. Examples:

• While making deliveries in a company auto, an employee runs a red light and causes an accident.

• A poor maintenance program causes the improper braking ability of a company vehicle, which results in an accident.


Liability Due to the Ownership, Maintenance or Use of Other Conveyances


Legal liability results when injury and/or damage arises out of the ownership, operation, maintenance or use of conveyances other than an "auto". The exposure will vary from business to business. Examples:


27

• Injury or damage is caused by the use of mobile equipment, such as a forklift. • The use of watercraft, aircraft or recreational vehicles causes harm or injury.


Liability due to Employing Workers


Legal liability arises from the statutory obligations employers have to employees regarding work-related injuries or occupational disease. This liability may also cover various consequential injuries to others caused by the employee's injury or disease. The exposure is subject to the laws and regulations governing workers compensation, employers liability and other employment-related issues in each state. Examples:

• An employee ruptures a disc while lifting a box of paper. • An employee develops chemical pneumonia from inhaling acidic fumes while cleaning

machinery.


Liquor Liability


Legal liability is imposed in most states when injury and/or damage arises from manufacturing, distributing, selling, serving or furnishing of alcoholic beverages. The exposure will vary and is subject to statutes and case law in each state. Examples:

• An employee becomes intoxicated at a company-sponsored picnic, where the company provided alcoholic beverages, and injures someone while driving home.

• A bar customer becomes intoxicated after consuming alcoholic beverages and injures someone while driving home.



28

Liability Arising from Environmental Impairment


Legal liability may be imposed by statute or because of injury and/or damage. The exposure may arise from direct or indirect involvement with pollution and/or pollution-related situations. Examples:

• Your negligent operation of a vehicle results in an accident, causing hazardous chemicals to leak from the other vehicle, gasoline to leak from the gas tank of your vehicle, and your cargo of toxic waste to spill.

• Your own commercial property contains leaking underground chemical tanks or lead-based paint.


Liability Arising from Professional Activities


Legal liability results from injury and/or damage arising from the giving or failure to give professional advice or service. The exposure will vary depending on the nature of the business and by state statute and case law. Examples:

• A CPA gives the wrong advice, resulting in IRS penalties and/or fines. • An architect makes a design mistake, causing a load-bearing wall to collapse.


Bailee Liability


Legal liability results from injury and/or damage arising out of the insured's possession of other's property. The exposure will vary on the nature of the business.


29


Summary of Common Business Liability Exposures


The next two pages list some sources of exposures. They are not all-inclusive. However, they do include many of the sources that businesses encounter that can result in legal liability. Click on each bold item below to review.

Premises: Legal liability results out of an injury and/or damage due to the ownership, maintenance or use of a location.

Operations: Legal liability results when injury and/or damages arises out of business activities such as construction, processing, manufacturing, repairing or loading and unloading of goods.

Products: Legal liability results when injury and/or damage arises out of defects in product design, manufacture or the failure to warn.

Completed Operations: Legal liability results when injury and/or damage arises out of defective or improper workmanship. The exposure applies to the insured's work.

The exposure begins once the operations have been completed and the insured leaves the work site.

Ownership, Maintenance or Use of Automobiles: Legal liability results when injury and/or damage arises out of the ownership, maintenance or use of an auto.

Almost every commercial client has this exposure.

Ownership, Maintenance or Use of Other Conveyances: Legal liability results when injury and/or damage arises out of the ownership, operation, maintenance or use of conveyances other than an auto. This exposure will vary from business to business.


Summary of Common Business Liability Exposures continued


Employing Workers: Legal liability arises from the statutory obligations employers have to employees regarding work-related injuries or occupational disease.

The exposure is subject to the laws and regulations governing workers compensation, employers liability,


30

and other employment-related issues in each state.

Liquor: Legal liability is imposed when injury and/or damage arises from the business of manufacturing, distributing, selling, serving or furnishing of alcoholic beverages.

The exposure will vary and is subject to statutes and case law in each state.

Environmental Impairment: Legal liability exposure that may arise from direct or indirect involvement with pollution and/or pollution-related situations.

Professional Activities: Legal liability results from injury and/or damage arising from the giving or failure to give professional advice or service.

The exposure will vary depending on the nature of the business and by state statute and case law.

Bailee: Legal liability results from injury and/or damage arising out of the insured's possession of other's property.

The exposure will vary on the nature of the business.

Please refer to the end of Lesson 1 Topic D to complete Self Quiz 2 at this time.

Lesson 1 Review Page (1IC)

Lesson 1: Learning Objectives Review

We suggest reviewing the Learning Objectives for this lesson to prepare for the final exam.

1. Define three categories of legal liability: tort, statutory and contractual. 2. Explain four types of tort liability and give an example of each. 3. Name the four requirements of a negligent tort. 4. Explain the concept of direct liability. 5. Define vicarious liability, and give examples of relationships where vicarious liability may be

created. 6. Name and describe the types of damages that may be awarded in a civil court case. 7. Identify and explain the sources of legal liability exposures.


Commercial Casualty I - National...

Documents

Transcript of Commercial Casualty I - National...