Casualty Insurance Basics: Liability, Auto, and Workers Comp
Negligence and legal liability
Liability insurance responds to the insured's legal obligation to pay damages. Negligence requires duty, breach of that duty, proximate cause, and actual damages. Defenses include comparative fault; Arizona follows pure comparative negligence, so a claimant's own fault reduces - but does not bar - recovery. Strict liability applies without proof of fault (e.g., abnormally dangerous activities), and vicarious liability holds one party responsible for another's acts, as with an employer and employee.
Commercial general liability
An occurrence-form CGL insures bodily injury and property damage caused by an occurrence during the policy period. Coverage A is bodily injury and property damage; Coverage B is personal and advertising injury; Coverage C is medical payments. Limits are tiered: each occurrence, general aggregate, products-completed operations aggregate, and damage to premises rented. Supplementary payments - defense costs, bonds, loss-of-earnings - are paid in addition to limits, which is a favorite exam point.
Auto and workers compensation
The personal auto policy has liability, medical payments, uninsured/underinsured motorist, and physical damage (collision, other than collision). Arizona relies on financial responsibility rather than no-fault; verify current mandatory limits. Workers compensation is an exclusive remedy: benefits are paid without regard to fault, and the employee generally cannot sue the employer for the injury.
Worked example: a 100/300/50 policy pays up to $100,000 per person, $300,000 per occurrence, $50,000 for property damage. Two claimants with $150,000 each recover $100,000 each = $200,000 total, still within the $300,000 occurrence limit.
Trap: defense costs do not erode CGL limits under the standard occurrence form.