Liability Insurance: Coverage, Risks, & Regulation

Table of Contents

Chapter 1: Liability & Risk	1
Risk	1
Law of Large Numbers	2
Liability & Society	3
The Liability Risk	4
Losses	4
Results of Verdicts	6
Fraudulent Claims	6
The Basis for Liability Claims	7
Liability under Torts	8
Intentional Acts or Omissions	8
"Privileged"	10
Strict Liability Imposed by Statute Law	11
Negligence	12
Presumed Negligence	12
Imputed Negligence	13
Negligence in Tort Liability	14
1) The required Elements of a Negligent Act	15
Legal Duty	15
Breach of Duty / A Wrong	16
Injury and/or Damage	16
Proximate Relationship	17
2) Defenses in a Negligent Act	18
Contributory Negligence	18
Tort Liability Exposures	19
Real Property / Personal	19
Attractive Nuisances	20
Business Liability Exposures	21
Personal Liability Exposures	22
In Conclusion	22
Table of Contents
Chapter 2: General Liability	23
Insuring One's Liabilities	23
Declarations	24
The Policy Jacket	24
Coverage Parts	25
General Liability	25
Personal Liability Forms	26
Professional Liability Forms	27
Moral/Morale Hazard	28
Business Liability Forms	29
Comprehensive General Liability (GCL)	29
Owners’, Landlords’ & Tenants’ (OL&T)	29
Manufacturers’ & Contactors’ (M&C)	30
Chapter 2: General Liability	23
Other Liability Coverages	31
Physicians', Surgeons' & Dentists' Liability Policy	31
Druggists' Liability Form	32
Hospital Liability Form	32
Miscellaneous Medical Liability	32
Errors & Omissions Insurance	32
Directors' & Officers' Liability	33
Contractual Liability Form	34
Owners' & Contractors' Protective Liability Insurance	35
Products & Completed Operations Liability Form	35
Products Recall Insurance	36
Personal Injury Liability Policy	37
Storekeepers' Liability Policy	38
Dramshop Liability Policy	38
Accountants' Professional Liability	39
Insurance Agents' & Brokers' Liability Policy	40
Lawyers' Professional Liability	40
Trustees' & Fiduciaries Liability	40
Employee Benefits' Manager Liability Policy	40
Actuaries Professional Liability	40
Medical Payments Insurance	41
Excess Insurance	42
Umbrella Liability Policy	44
Excess Personal Liability Policies	45
In Conclusion	46
Chapter 3: Adjusters & Liability Insurance	47
Professional Responsibilities of Adjusters	48
Adjusters and Liability Claims Handling	49
The Claims Handling Process	50
Preventing Bad Faith Claims	50
The Human Aspect	51
Regulatory and Ethical Obligations	51
Unfair Claims Settlement Practices	52
Ethical Responsibilities	52
Emerging Risks for Adjusters	53
In Conclusion: The Adjuster as a Liability Manager	54
Chapter 4:  Auto Liability	55
Is there really a need?	55
Increasing Insurance Premiums	57
Premium Rates	58
File & Use Law	60
Open Competition Law	60
Financial Responsibility Law	61
Compulsory Liability Insurance Law	62
Automobile Insurance Plans (AIP)	63
Reinsurance	64
Unsatisfied Judgment Funds (UJF)	67
Uninsured Motorists Coverage	69
Automobile no-fault plans	69
Other no-fault plans	69
Vision Zero	73
In Conclusion	73
Chapter 5: Employers' Liability	74
Early Attempts	74
An Employer's Liability	75
Common-law Liability	75
Employers' Liability Acts	76
Workers' Compensation Laws	76
Compulsory & Elective Laws	78
Covered Perils	78
Types of Benefits under Workers' Compensation Laws	79
OASDHI	80
Workers' Compensation Insurers	82
Standard Workers' Compensation & Employers’ Liability Policy	84
Declarations	84
Insuring Agreements	85
Exclusions	85
Conditions	86
Basic Rating Plans	86
Experience Rating Plans	86
Premium Discount Plans	86
Retrospective Rating Plans	86
Occupational Safety & Health Act (OSHA)	87
Second-Injury Funds	88
Insurer Practices in Workers’ Compensation	88
In Conclusion	89
Chapter 6: Miscellaneous Property & Liability	90
Aviation Insurance	90
Basic Nature	91
Types of Contracts	93
Basic Policy Forms	95
Hull Insurance	95
All-Risks Hull Coverage	95
Fire and Windstorm	96
Crash Insurance	96
Deductibles and Participation	96
Modern Developments	96
Aircraft Liability	97
Voluntary Settlement Coverage (formerly Admitted Liability)	98
Medical Payments Coverage	98
Light Aircraft and Specialty Policies	98
Aviation Premium Rates	99
Boiler and Machinery Insurance	101
Coverage Scope	102
Direct Loss Coverage	102
Indirect Loss Coverage	102
Standard Coverages	103
Exclusions and Limitations	103
Modern Importance	104
Glass Insurance	104
Policy Coverage	104
Broken Glass	105
Frames, Temporary Plates	105
Historical Context	105
Credit Insurance	106
Policy Structures and Operation	106
Domestic and Export Credit Insurance	107
Credit Insurance Market and Modern Uses	107
Accounts Receivable Insurance	108
Valuable Papers & Records Insurance	109
Modern Developments	109
Title Insurance	110
The Nature of Title Defects	110
Types of Title Insurance Policies	110
Policy Forms & Coverage Enhancements	111
Emerging endorsements	112
Standard Exclusions	112
Title Insurance vs Other Insurance	112
The Claims Process	112
Regulation of Title Insurance	112
The NAIC and Title Insurance Oversight	113
Canada – A Hybrid System of Government Assurance and Private Insurance	115
Fraud Risks in Title Insurance	117
In Conclusion	118
Chapter 7: Underwriting Liability Policies	119
Underwriting Responsibility	119
The role underwriting plays	119
The Agent's Role in Underwriting	121
Practical Applications in Liability Insurance	122
The Underwriting Selection Process	123
Purpose of the Selection Process	125
Auto Underwriting	125
Modern Risk Evaluation	126
Residual Market Mechanisms	126
Rating	127
Primary Rating Factors	128
Age, Sex, and Marital Status of Drivers	128
Use of the Automobile	129
Driver Training and Good Student Discounts	129
Secondary Rating Factors	130
Multi-Car Discounts	130
Type of Vehicle	130
Safe Driver Rating Plans	130
Emerging Rating Factors	130
Credit-Based Insurance Scoring	131
Telematics and Usage-Based Insurance	131
Territorial and Environmental Factors	131
The Purpose of Rating	132
Other Rating Factors: Moral & Morale Hazards	132
Emerging Technologies in Underwriting	133
Underwriting for Business Liabilities	135
Modern Considerations	136
International Contrast: Underwriting in Canada	137
In Conclusion	140
Chapter 8: Review	141
Review of Chapter 1 – Risk and Liability	141
Review of Chapter 2 – General Liability	142
Review of Chapter 3 – Adjusters & Liability Insurance	143
Review of Chapter 4 – Automobile Liability	143
Review of Chapter 5 – Employers’ Liability	144
Review of Chapter 6 – Miscellaneous Property & Liability	145
Review of Chapter 7 – Underwriting	146

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