Criminal and Tortious Behavior

Criminal and Tortious Behavior • 1. Two classes of wrong: public and private (crimes and torts). • 2. Crimes are punishable by fine, imprisonment or execution. • 3. Tortfeasors may be liable in civil actions. • 4. Torts may be intentional or unintentional. • 5. Liability insurance is concerned primarily with unintentional torts.

Liability May be Imposed When • 1. There was negligence. • 2. There was actual damage or loss. • 3. The negligence was the proximate cause of the damage.

There Must be Negligence • 1. Basic concept of law holds that unless a person is at fault, he or she is not liable. • 2. Negligence is the failure of a person to exercise the proper degree of care required by the circumstances.

Who May be Held Liable? • 1. Persons capable of prudent acts • infants excepted • mental incompetents • 2. Other excepted classes (or formerly excepted) • government bodies (sovereign immunity) • charitable institutions

What Constitutes Negligence • 1. Failure to behave in the same manner as would a reasonable and prudent individual. • 2. Obligation to act or not act, and failure in that obligation. • 3. Normally, the burden of proof of negligence is on the injured party. • 4. Certain doctrines impose liability by statute or shift the burden of proof.

Tort Doctrines • 1. Negligence per se • 2. Absolute liability • 3. Res ipsa loquitur

There Must be Actual Damage or Loss • 1. Mere carelessness or negligence is not sufficient cause for legal liability. • 2. The person seeking recovery must have suffered actual injury or damage. • 3. Tort may result in two forms of injury to another: • bodily injury • property damage

Classes of Damages • 1. Special damages: out of pocket and measurable loss. • 2. General damages: intangible; pain and suffering, etc. • 3. Punitive damages: intended to punish tortfeasor.

Collateral Source Rule • 1. Holds that negligent party should not benefit from the existence of other sources of recovery available to the injured party. • 2. Damages payable by a tortfeasor are not reduced by payments made to the injured party under life or health insurance contracts.

Negligence Must Be Proximate Cause of Damage • There must have been an unbroken chain of events beginning with the negligence and leading to the injury or damage. • intervening cause • superseding cause

Vicarious Liability • 1. Respondeat Superior • 2. Parental responsibility for acts of children • 3. Joint-and-several liability

Joint-and-Several Liability • 1. Liability is joint-and-several when plaintiff obtains a judgment that may be enforced against multiple tortfeasors collectively or individually. • 2. Permits plaintiff to recover the entire amount of a judgment from any tortfeasor who is able to pay, regardless of the degree of that party’s negligence. • 3. A number of states passed laws in 1986 and 1987 to abolish or modify joint-and-several liability.

Obligations of Property Owners to Others • 1. Trespasser avoid intentional injury • 2. Licensee warn of any dangers • 3. Invitees make the premises safe • 4. Children attractive nuisance doctrine

Defenses to Negligence • 1. Assumption of risk • 2. Negligence on the part of the injured party • contributory negligence • comparative negligence • last clear chance • 3. Survival of tort actions • 4. Legal liability and bankruptcy

Comparative Negligence • Common Percent Law Wisc. Miss. Party At Fault Loss Recovery Rule Rule • Brown 40% $10,000 0 $6,000 $6,000 • White 60% $10,000 0 0 $4,000

Possible Changes in the Tort System • 1. Alternative dispute resolution mechanisms (binding arbitration for small claims). • 2. Elimination of joint-and-several liability. • 3. A sliding fee schedule for plaintiff’s attorneys. • 4. “Caps” on noneconomic damages. • 5. Elimination of collateral source rule. • 6. Structured settlements to replace lump sum awards. • 7. Elimination of punitive damages or make punitive damages payable to the state.

Liability Insurance in General • 1. Undertakes to pay the obligation imposed on a negligent insured. • 2. Called “third party” coverage since it compensates someone who is not a party to the contract. • 3. In addition to promise to pay, usually agrees to defend insured.

Types of Liability Insurance • 1. Automobile liability insurance • 2. Employers liability and workers compensation • 3. General liability

Comprehensive Personal Liability Coverage • 1. May be purchased separately, or as Section II of the homeowners policy. • 2. Covers the non-business, non-auto liability exposure of the individual or family.

Homeowners Section II Coverages • 1. Coverage E Personal Liability • 2. Coverage F Medical Payments to Others • 3. Additional Coverage

Liability Insuring Agreement • If a claim is made or a suit is brought against any insured for damages because of bodily injury or property damage to which this coverage applies, we will: • a. Pay up to our limit of liability for the damages for which the insured is legally liable; and • b. Provide a defense at our expense by counsel of our choice.

Liability Insuring Agreement • We may make any investigation and settle any claim or suit that we decide is appropriate. • Our obligation to defend any claim or suit ends when the amount we pay for damages resulting from the occurrence equals our limit of liability.

Section II - Persons Insured • 1. Named insured • 2. Relatives residing in the same household • 3. Any other person under 21 in care of insured • 4. Persons having custody of covered animals or watercraft • 5. Employees or anyone with permission while operating a covered vehicle

Liability Exclusions • 1.a. Intentional injury • 1.b. Business and professional activities engaged in by insured • 1.c. Rental of property • 1.d. Professional liability • 1.e. Uninsured premises

Liability Exclusions • 1.f. Motor vehicles • designed for travel on public roads • owned recreational motor vehicles off premises • exception for golf carts, and vehicles not subject to registration used to service premises or to assist the handicapped

Liability Exclusions • 1.h. Aircraft completely excluded • 1.i. War • 1.j. Communicable disease • 1.k. Sexual molestation or abuse • 1.l. Controlled substance

Homeowners Medical Payments • Agrees to pay all reasonable medical expenses incurred or medically ascertained within 3 years from date of accident to persons (other than the insured and family members) injured: • a. while on premises with permission of any insured

Homeowners Medical Payments Exclusions • 1. Intentional injuries, business pursuits, uninsured premises, motor vehicles, recreational motor vehicles, boats, nuclear • 2. Injury to residence employee off premises while not working • 3. If expenses are payable under workers compensation • 4 Persons residing on the premises

Section II Conditions • 1. Limit of Liability • 2. Severability of Insurance • 3. Duties After Loss • 4. Duties of Insured Persons - Medical Payments • 5. Payment of Claims - Medical Payments • 6. Suits Against Us • 7. Bankruptcy of Insured • 8. Other Insurance - Coverage E

Professional Liability Insurance • Insurance for liability arising out of failure to use due care and the degree of skill expected of a person in a particular profession. • 1. Malpractice insurance, where there is an exposure of bodily injury • 2. Errors and Omissions, where the risk involves property damage (including intangible property)

Professional Liability Insurance • 1. Generally written on a claims-made basis. • 2. Under older policies, insurer was required to obtain insured’s consent for settlement. • 3. Most newer policies have deleted the requirement that the insurer obtain consent of the insured before making an out-of-court settlement.

Umbrella Liability Policy • 1. Requires a substantial program of underlying coverage. • 2. Provides excess protection for losses covered by underlying. • 3. In those areas where umbrella is broader than primary insurance, coverage applies subject to a deductible.

$1.3 million $1 million Personal Umbrella $300K $300K $100K $50K $250 $250 $250 Personal Auto Policy Homeowners

Criminal and Tortious Behavior