Risk Management and Commercial Liability RiskLiability Loss Exposures: Review of 4000Types of Liability DamagesNegligence: ElementsTypes of Damage AwardsDefenses Against Negligence ClaimsImputed NegligenceTypes of Liability ExposuresTypes of Liability Exposures: PremisesSlide 10Types of Liability Exposures: ProductsSlide 12Liability Insurance PoliciesThe Insuring ClauseSupplementary PaymentsDefinition of InsuredLimits of LiabilityGeneral Liability Loss ExposuresCommercial General Liability Policy (“CGL”)CGLSlide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Slide 28Liability Policy Coverage TriggersSlide 30Coverage Triggers: C-MSlide 32RMIN 5100: Trieshmann, Hoyt, & Sommer text, as provided in ElcChapter 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. Risk Management and Commercial Liability RiskLiability Loss Exposures: Review of 4000Refer to Chapter 3 as posted on eLCTypes 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 3Negligence: 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 Liability4Types of Damage Awards5Defenses 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 Defense6Imputed 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 RuleTypes 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OthersTypes 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.9Types 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 inviteeTypes 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.11Types 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!12Liability 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 TriggerThe 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 bold e d 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-limitsGeneral 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,