CPCU 552 Flashcards – Module 1
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[h] CPCU 552 – Module 1
[q] Legal liability
[a] The legally enforceable obligation of a person or an organization to pay damages to another.
[q] Civil law
[a] A classification of law that protects rights and provides remedies for breaches of duties.
[q] Criminal law
[a] A classification of law that imposes penalties for wrongs against society.
[q] Tort
[a] A wrongful act other than a breach of contract or crime.
[q] Broad categories of torts
[a] Three broad categories:
Negligence.
Intentional torts.
Strict liability torts.
[q] Negligence
[a] A civil wrong that is unintentional.
[q] Elements of negligence
[a] Elements:
The defendant owed a legal duty to the plaintiff.
The defendant breached the duty.
The negligent act was the proximate cause.
The plaintiff suffered damage or injury.
[q] Intentional tort
[a] A tort committed by a person who foresees the act will cause harm.
[q] Strict liability
[a] Liability imposed even though defendant acted neither negligently nor with intent to cause harm. Also known as absolute liability.
[q] Breach of contract
[a] The failure to fulfill a contractual promise.
[q] Hold-harmless agreement
[a] A contractual provision that obligates one party to assume the legal liability of another party.
[q] Statute
[a] A written law passed by a legislative body, at either the federal or state level.
[q] Categories of commercial liability exposures
[a] Categories:
Premises and operations liability.
Products and completed operations liability.
Auto liability.
Workers compensation and employers liability.
Professional liability, management liability.
Marine liability, aircraft liability.
Cyber liability.
[q] Premises and operations liability
[a] Liability that arises from bodily injury or property damage caused by:
An accident occurring on an organization’s owned, leased, or rented premises.
An accident arising from an organization’s ongoing operations away from the premises.
Certain mobile equipment.
[q] Products liability
[a] Liability that arises out of the manufacture, distribution, or sale of an unsafe, dangerous, or defective product.
[q] Elements needed to provide strict liability
[a] Plaintiff must prove:
The product was defective when it left the manufacturer’s or supplier’s control.
The defective condition made the product unreasonably dangerous.
The product was proximate cause of injury.
[q] Completed operations liability
[a] Liability of an entity arising out of their completed work.
[q] Reasons for risk control programs
[a] Reasons:
Liability exposures that arise from products and activities can cause serious harm.
Exposures can result in significant financial consequences.
Poor safety records and serious accidents can cause reputational damage.
[q] Loss prevention
[a] A risk control technique that reduces the frequency of a particular loss.
[q] Loss reduction
[a] A risk control technique that reduces the severity of a loss.
[q] Risk avoidance
[a] A risk control technique that involves ceasing or never undertaking an activity, thus eliminating loss potential.
[q] Key issue affecting the valuation of a liability claim
[a] Key issue is the amount of monetary compensation that will reasonably indemnify the party who incurred the loss.
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