Chapter 5 - C 120

Terms	Definitions
How is liability insurance different from other types of insurance?	it is not insurance of something concrete but abstract. it is third party insurance, not first party.
What does the term "third party" refer to?	understood as a person or organization not party to the insurance contract but whose legal complaint against the insured brings the contract into play.
What must happen before a third party's injury or loss can become a loss under a liability policy?	it must be determined as a liability by the courts.
What are the THREE (3) levels of government in Canada? What responsibilities are assigned to each level?	federal, provincial and municipal.
What are the TWO (2) types of civil law in Canada? Briefly describe each one.	civil code of Quebec - not to make laws but to settle disputes system of common law - mixture of case law and statute law.
What are the THREE (3) ways that civil law may impose liability?	negligence, nuisance and breach of contract.
What is the definition of "nuisance"? What is the difference between private and public nuisance?	it is the substantial and unreasonable interference with a person's right to enjoy and use his or her own property. private - interfere with person's use and enjoyment of living area public - interference involves the rights of many.
What is the purpose of the ABC rule? List the rule's THREE (3) parts.	the ABC rule is used to establish a cause of legal action for negligence. - a duty of care exists, the duty was breached and there is a causal relationship shown between the breach and damage
What are the implications for a liability policy when third parties are added as additional named insureds?	additional named insureds become first parties instead of third parties in liability cases.
What is the difference between a trespasser and a licensee?	a trespasser is a person who wrongfully enters onto someone else's land with neither right or permission to be there while a licensee has consent of the occupier.
What is the difference between a contractual entrant and an invitee?	a contractual entrant is a person who enters onto premises under a contract with the occupier e.g. hotel guest whereas an invitee is a person who enters onto the premises with permission when the occupier has some financial interest in the matter.
What are some questions that will help an underwriter assess the premises liability exposure for a given risk?	conditions of building and grounds, maintenance of parking, stairs, walkways, lighting, exit lights? etc.
What are hold-harmless clauses and indemnity agreements?	hold-harmless clauses and indemnity agreements are used together to transfer liability from where it normally lies to someone else and to direct who will pay for defense costs. e.g. snow removal company may require building own to notify when there is snow, assigning responsibility to the owner.
What steps should an underwriter's analysis of premises liability exposure generally include?	know the exposure, the occupancy and the applicant's activities, understand legal requirements, review risk's loss history, review loss control reports
Why is products liability exposure heightened when a company's products are consumable?	quality control is much more difficult as there is no way to truly test the product.
What details concerning product liability should be included in an underwriter's analysis of risk?	the name and address of the risk, the number of years it has been in business, its payroll and receipts and other measures of its financial well-being.
What types of personal information about an applicant might be useful for an underwriter who is assessing personal liability exposure?	questions about the owner's lifestyle, occupation and hobbies
What is contributory negligence?	is a partial defense against an allegation of negligence. percentage of blame proportionate with damages.
What is a personal umbrella policy? What is the purpose of a personal umbrella policy?	a personal umbrella policy is enhance protection over a ordinary liability insurance policy.
Why does the premium for personal umbrella insurance tend to be fairly low?	they are low because exposures that it covers are "second level", they are contingent on other events.
Why might a commercial risk need employer's liability coverage, even in some circumstances where an employee is eligible for workers compensation insurance?	if an employee is working outside the jurisdiction for a certain period of time or longer.
How does technology affect liability exposure?	e-commerce is largely untested in the courts which makes it difficult for insurers to quantify.
Why is premises liability exposure for a commercial risk such as a bakery higher than for a personal risk such as a dwelling-owner?	the bakery's customers are invitees and are therefore entitled to a higher standard of care then if they were trepassers or licensees.
what are the THREE (3) main benefits of a personal umbrella policy?	1. limit the insurance in excess of those in the primary policy 2. drop-down coverage to cover certain exposures that the primary policy does not 3. territorial limits are wider than those in the primary policy.