Risk Management and Commercial Liability Risk RMIN 5100 Trieshmann Hoyt Sommer text as provided in Elc Chapter 3 Complete Chapter Review of 4000 Chapter 11 PP 198 to 206 New Information NOTE Chapter 3 is review of 4000 We will not go over this in detail in class However you will be expected to know the information Liability Loss Exposures Review of 4000 Refer to Chapter 3 as posted on eLC Types of Liability Damages Bodily injury Includes liability for losses a person may incur because his or her body or mind has been harmed Includes payments for medical bills loss of income rehabilitation costs loss of services pain and suffering damages punitive damages Property damage Loss may be due to a loss from actual damage to the property as well as loss of use of the property Personal injury Result from libel slander invasion of privacy false arrest etc Legal expenses 3 Negligence Elements Elements Negligence Existence of a legal duty to use reasonable care Failure to perform that duty Damage or injury to the claimant Proximate cause relationship between the negligent act and the infliction of damages A proximate cause relationship requires an unbroken chain of events Strict Liability 4 Types of Damage Awards 5 Defenses Against Negligence Claims The ability to collect from Negligence depends on State Law Contributory negligence Comparative negligence shared based on percentage of fault Assumption of Risk Doctrine The Last Clear Chance Rule State of the Art Defense 6 Imputed Negligence Under certain circumstances the negligence of one person may be imputed to another Vicarious Liability Law Family Purpose Doctrine Dram Shop Law Respondant Superior Joint Several Rule Types of Liability Exposures Liability may arise from a number of sources Here are but a few Note Many of these are not listed in the book Owners Landlords Tenants Premises Products Professional Principal Agent Workers Compensation Employer Liability Automobile Others Types of Liability Exposures Premises Property Owner Landlords Tenants OL T The tenant or owner owes a certain degree of care to those who enter the premises Invitees Licensees Trespassers Current trend is to abolish the classifications and to hold the occupier of the land liable under most circumstances for failure to exercise due care 9 Types of Liability Exposures Premises Assumption of liability by tenant When an individual leases a building the question arises as to what extent the landlord is responsible for injuries to tenants Generally the tenant takes on whatever duty the landlord owes to members of the public Attractive nuisance doctrine Liability of the occupier of land may be changed so that a trespassing child is considered in many jurisdictions to be an invitee Types of Liability Exposures Products A manufacturer wholesaler or retailer is required to exercise reasonable care and to maintain certain standards in the handling and selection of the goods in which it deals If a product causes BI PD the injured party may sue the manufacturer wholesaler or retailer The plaintiff may be anyone injured by the product Does NOT have to be the one who purchased the product 11 Types of Liability Exposures Products Negligence If the defendant was negligent in the preparation or manufacture of the product Or failed to provide adequate instructions or warning A person injured may be entitled to sue for damages During the past several years the product liability area has been very explosive Courts have continued to expand manufacturers liability And don t forget Liability can be assumed under contract 12 Liability Insurance Policies Many types of liability policies exist to handle the various exposures General Liability Med Malpractice Directors Officers Workers Comp etc Provisions in Every Liability Policy include Insuring Agreement Supplementary Payments Definition of Insured Exclusions Limits of Liability Specification of Coverage Form Policy Trigger The Insuring Clause In general a liability policy has an insurance clause that reads something like this We will pay those sums that the insured becomes legally obligated to pay as bodily injury or property damage to which this insurance applies We will have the right and duty to defend the insured against any suit seeking those damages Note In a policy if a word is bolded or put in quotations that means that it is defined within the policy Supplementary Payments In addition to the sums that the insured is legally obligated to pay most liability insurance policies will also cover All expenses incurred by the Insurance Company Bail Bonds up to 250 Reasonable expenses incurred by Insured to assist with the investigation or claim All costs taxed against the insured in the suit Pre and Post Judgment Interests DEFENSE Included Inside or Outside of the limits Definition of Insured Can differ by policy but usually includes the organization subsidiaries and all partners officers directors proprietors and employees while performing their duties for the business firm Limits of Liability Per Occurrence Limits Aggregate Policy Limits Sub limits General Liability Loss Exposures General liability refers to legal liability arising out of business operations other than auto or aviation accidents and employee injuries Some important exposures include Premises and operations liability arising out of the ownership and maintenance of the premises where the firm does business Products liability arising out of the manufacturing and sale of products Completed operations liability arising out of faulty work performed away from the premises after the work or operation is completed Contractual liability arising out of the assumption of legal liability through a written or oral contract Contingent liability arising out of work done by independent contractors Commercial General Liability Policy CGL The commercial general liability policy CGL is widely used by firms to cover their general liability loss exposures The policy comes in two forms an occurrence form and a claims made form An occurrence policy covers liability claims arising out of occurrences that take place during the policy period regardless of when the claim is made A claims made policy covers only claims that are first reported during the policy period or extended reporting period provided that the event occurred after the retroactive date if any stated in the policy The CGL policy can be written alone or included in a commercial package policy CGL Section I of the CGL contains