FL Adjuster Claims Professional Exam Study Guide

Introduction to Liability Insurance

Liability insurance, also known as casualty insurance, protects against claims alleging that the insured is responsible for injury or damage to another party. It is often referred to as "lawsuit protection" insurance and operates under tort law, which addresses civil wrongs.

Key Point: Liability insurance claims are paid only if the insured is legally responsible for damages to another party.

Fast Facts

Protects against claims of injury or damage caused by the insured.
Involves tort law, which provides monetary damages for civil wrongs.
Requires legal responsibility to be established for claim payments.

Negligence

Negligence is the failure to use reasonable care under given circumstances, leading to most liability insurance claims. To establish negligence, four elements must be proven:

Duty of Care: The defendant had a responsibility to act or not act to avoid harm.
Breach of Duty: The defendant failed to exercise that duty, intentionally or unintentionally.
Causation: The defendant’s actions or inactions were the proximate cause of the injury.
Damages: The plaintiff suffered a compensable injury or property damage.

Key Point: All four elements must be present to hold a defendant liable for negligence.

Duty of Care

The defendant must owe a duty to the plaintiff, either by law (e.g., stopping at red lights) or by reasonable measures to prevent foreseeable harm (e.g., clearing snow from a walkway).

Breach of Duty

A breach occurs when the defendant fails to uphold their duty, such as not salting an icy sidewalk after shoveling snow.

Example: A homeowner shovels snow into a pile on the sidewalk and fails to salt it, leading to a pedestrian slipping and getting injured.

Causation

The defendant’s actions or inactions must directly cause the plaintiff’s injury through a short chain of events with foreseeable consequences.

Key Point: Liability is not imposed for bizarre or unforeseeable consequences.

Damages

The plaintiff must have suffered a compensable injury or property damage to recover monetary damages.

Damages

Damages are monetary awards to compensate for harm. They are divided into two categories:

Compensatory Damages

Special Damages: Awarded for tangible losses with measurable value, such as medical bills or lost income.
General Damages: Awarded for non-measurable losses, such as pain and suffering.

Punitive Damages

Punitive damages are awarded to punish the defendant for egregious or deliberate wrongs and to deter similar behavior.

Answer: Special damages cover tangible losses (e.g., medical bills), general damages address pain and suffering, and punitive damages punish and deter egregious conduct.

Defenses to Negligence

Defendants can avoid liability by disproving one of the four negligence elements or by showing the plaintiff’s conduct contributed to the injury. The three common defenses are:

Assumption of Risk

The plaintiff knowingly and voluntarily exposed themselves to a known risk.

Example: A sports fan attending a game assumes the risk of being hit by a stray ball or puck and cannot hold the stadium liable.

Contributory Negligence

If the plaintiff contributed to their injury, even minimally, they may forfeit their claim. This doctrine is considered unfair and is often replaced by comparative negligence.

Comparative Negligence

Fault is apportioned between the plaintiff and defendant, reducing the plaintiff’s recovery by their percentage of fault.

Example: A plaintiff speeding slightly (30% fault) collides with a defendant running a red light (70% fault). The plaintiff recovers 70% of their $100,000 damages, or $70,000.

Types of Liability

Strict (Absolute) Liability

Imposed for inherently dangerous activities, regardless of negligence. The plaintiff only needs to prove injury or damage from the defendant’s conduct.

Example: Injuries from blasting operations or wild animals in captivity trigger strict liability.

Vicarious Liability

One person is liable for another’s actions, such as a parent for a child’s torts or an employer for an employee’s negligence during work.

Example: An employer is liable for damages caused by an employee’s negligence while performing job duties.

Factors Influencing Liability

Property owners’ obligations vary based on the entrant’s status:

Trespasser: Enters without consent; minimal care owed.
Licensee: Has implicit permission (e.g., salesperson); moderate care owed.
Invitee: Has explicit permission (e.g., guest); highest care owed.

Attractive Nuisance

Property owners can be liable for harm to trespassing children if an attractive feature (e.g., an unfenced pool) draws them in.

Example: A homeowner is liable if a child drowns in an unfenced pool, even with a “No Trespassing” sign, due to the attractive nuisance doctrine.