Basics of Liability Insurance Policies

This agreement pays legally obligated compensation to 3rd parties for losses in policy period & territory
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Terms in this set (19)
This agreement pays legally obligated compensation to 3rd parties for losses in policy period & territory
Insuring agreement
This describes an event that causes a claim
Coverage Trigger
What kind of coverage triggers are there?
Occurrence Based (Claims that occur during policy) and Claims made (Claims brought up during policy coverage ex. Errors & Omissions Coverage.
What do liability insurance policies insure?
Bodily injury and property damage
Bodliy injury from external source (hit by car), sickness (manifests internally), or death resulting from either the above are examples of what coverage?
Bodily injury coverage
Physical injury to tangible property including loss of use to undamaged property is an example of what coverage?
Property damage coverage
On liability policies are payments only required to be made if the insured is found legally liable?
Yes, they have to be proven legally liable to the damages caused.
Are payments only able to be made to people not named on the policy?
Yes, liability insurance only pays for damage to others.
Does liability insurance only pay for compensatory damages only?
Yes, they cannot be normative/nominal or punitive/exemplary damages.
This is damage that is insurable and can be compensated by a payment.
Compensatory damages
These are damages that are unquantifiable (ex. pain and suffering)General damages (Insurable)These are out-of-pocket expenses that can be proven (ex. Medical expenses)Special damages (Insurable)These damages are not insurablePunitive (Punish offenders), Exemplary (Make examples of), Nominal (Suits that establish right or wrong with no damage)What does it mean when they say the coverage is provided on an occurrence basis?It means the policy in force at the time of the loss is the one that pays. (chemical leak in 2008, claim was brought to the insurer in 2018, the 2008 policy will pay for that loss)Definition: This is an accident that includes long term exposureOccurrenceThis describes an event that was sudden and unexpected, occurs at a particular point in time (IE: car crash)AccidentThis describes something that occurs over a long period of timeContinues ExposureWhat are the duties of the insured in the event of a claim or occurrence?(PALAC) - Prompt notice to insurer of any occurrence that might lead to a claim in the event of an occurrence or claim: - Assist in investigation, settlement or defence - Legal papers must be immediately forwarded to insurer (has time limit to respond) - Authorize insurer to obtain info (police reports, etc.) - Can't make voluntary payment other than first aid (except at own cost)Cost of defence + expenses of insured to assist + court costs + interest payable are considered what additional payments?Supplementary payments