Casualty & Liability Insurance
Casualty insurance centers on legal liability to others. This chapter covers negligence and its elements, categories of liability, and how liability and umbrella policies respond to third-party claims. These legal concepts are consistent nationwide.
Negligence and Its Elements
Negligence is the failure to exercise the degree of care a reasonably prudent person would use in similar circumstances, and it is the basis for most liability claims. To prevail, an injured party generally must prove four elements: a legal duty owed, a breach of that duty, that the breach was the proximate (direct) cause of harm, and actual damages. Intent is not required for negligence; an intentional act that causes harm is a separate category and is typically excluded from liability coverage.
Categories of Liability
Liability can arise in several ways. Negligence-based liability requires proof of carelessness. Absolute (strict) liability is imposed without regard to fault for inherently dangerous activities or under certain statutes. Vicarious liability holds one party responsible for another's acts, such as an employer for an employee. Contractual liability is assumed by agreement. Defenses to negligence, including contributory and comparative fault, address how an injured party's own carelessness affects recovery.
Liability and Umbrella Policies
Liability (third-party) coverage responds when the insured is legally obligated to pay damages for bodily injury or property damage to another, and it usually includes the insurer's duty to defend. A personal umbrella policy adds an extra layer of liability limits above the insured's underlying home and auto coverage and may cover some claims the underlying policies exclude, subject to a self-insured retention. Umbrellas generally require the insured to maintain specified underlying limits.