C13: Insurance Against Liability-Part 1 common mistakes
C13: Insurance Against Liability-Part 1 · Understand the traps and how to avoid them.
Reading 'occurrence' as any event that causes harm, so a claim for faulty workmanship or a deliberately struck blow is analyzed as a covered occurrence without testing the accidental/intentional distinction.
Everyday usage treats 'occurrence' and 'accident' as synonyms for 'something that happened,' and candidates carry that lay meaning into the policy definition instead of applying the fortuity requirement.
What to do instead
Before analyzing coverage, write the policy definition of occurrence on scratch paper and force each fact pattern through two gates: was the injury/damage neither expected nor intended from the standpoint of the insured, and is the act an accident rather than a deliberate act or a contractual business risk?
Choosing the trigger-of-coverage theory (exposure, manifestation, injury-in-fact, continuous) by personal preference instead of by the jurisdiction or policy language stated in the question, then applying the wrong policy year's limits.
Candidates memorize that 'injury-in-fact is the majority rule' and stop there, missing that many questions specify a jurisdiction, a date of first manifestation, or a claims-made form where the trigger question is framed differently.
What to do instead
Highlight the date anchors in the stem (exposure dates, diagnosis date, claim date, policy periods) and the form type first; state the trigger rule the stem supplies, then allocate the loss to the period that rule points to before touching limits.
Applying the CGL occurrence form's 'bodily injury during the policy period' timing logic to a claims-made policy, or vice versa, so the candidate misses that a claims-made policy responds to a claim first made during the period regardless of when the injury happened.
Both forms live in the same mental bucket labeled 'liability insurance,' and the retroactive date and extended reporting period concepts get skipped because they look like fine print.
What to do instead
Build a two-column comparison card (trigger, retro date, ERP, reporting requirement) and, on every liability question, first label the form as occurrence or claims-made, then check the retroactive date against the injury date and the claim date against the policy period.
Treating the employer's liability exclusion as a total bar to any employee claim, instead of recognizing that it removes bodily injury to employees arising out of and in the course of employment while leaving the separate employer's liability limits available for certain claims.
The exclusion reads broadly and candidates stop at 'employee injury equals excluded' without reading the exception language and the separate limits that sit alongside Coverage A.
What to do instead
Annotate the exclusion with its exceptions and pair it with the employer's liability limit entry on the declarations page; for any employee-injury fact pattern, state which exclusion applies, which exception is argued, and which limit (each accident, disease each employee, disease policy limit) would respond.
Assuming the contractual liability exclusion bars all liability assumed in a contract, rather than distinguishing insured contracts (such as a lease of premises or an easement agreement) from other assumed obligations.
The word 'contract' triggers a blanket reaction, and the insured-contract definition is buried in the definitions section rather than the exclusion itself.
What to do instead
Memorize the insured-contract categories as a short list and, on each contractual liability question, ask whether the insured would have been liable even absent the contract (tort liability survives the exclusion) and whether the contract falls into an insured-contract category.
Treating the 'your product' and 'your work' exclusions as eliminating all coverage for a defective product or completed job, ignoring the exceptions that restore coverage for bodily injury or property damage to other property caused by the product or work.
Candidates see 'your product' in the exclusion title and conclude the claim is dead, without reading the exception paragraph that follows the exclusion.
What to do instead
For every products-completed operations fact pattern, run the three-part test: what is the damaged property, is it the named insured's product or work or the impaired property of another, and does an exception (damage to other property, loss of use of other property) restore coverage? Then check whether products-completed operations aggregate applies.
Confusing Coverage B's enumerated offenses with general reputational harm, so a claim for disparagement or for a slogan infringement is analyzed under the wrong offense or rejected because it does not fit 'libel or slander.'
Coverage B is studied quickly as 'advertising injury,' and the specific offenses (oral or written publication of defamatory material, wrongful eviction, violation of privacy, use of another's advertising idea, infringement of copyright/trade dress/slogan) blur together.
What to do instead
Keep a numbered list of Coverage B offenses and match the alleged act to a specific number; then apply the advertising-injury requirement that the offense arise in the course of advertising the insured's goods or services, and check the knowing-violation and breach-of-contract exclusions.
Treating Coverage C medical payments as requiring negligence or as subject to the liability limits and deductible, instead of recognizing it pays reasonable medical expenses for bodily injury caused by an accident on the insured's premises or arising from operations, without regard to fault and without a deductible.
Candidates lump Coverage C with Coverage A and import fault, limits, and deductible assumptions that do not belong to it.
What to do instead
Write a one-line rule for Coverage C (no fault, no deductible, separate limit, one year of expenses, excludes persons covered under workers compensation or auto medical payments) and test each medical-payments question against that rule before considering Coverage A.
Applying a self-insured retention as if it were a deductible, subtracting it from the limit or assuming the insurer pays defense costs within the limit from the first dollar, when the SIR must typically be exhausted by the insured before the policy responds and may sit outside the limit.
Deductibles and SIRs are both 'money the insured pays first,' so the structural differences (who defends, whether defense erodes the SIR, whether the limit is excess of the SIR) get flattened.
What to do instead
For each limits question, draw the layer stack: SIR at the bottom, then the policy limit, then any umbrella or excess layer, and label whether defense is inside or outside the limit and whether the SIR must be satisfied before the insurer has any duty to defend.
Answering a negligence question by jumping to comparative fault or an assumption-of-risk defense before establishing the four elements, so a fact pattern with no breach or no actual causation is still analyzed as if liability existed.
Candidates recognize the familiar vocabulary of fault defenses and skip the element-by-element proof, especially when the facts are emotionally sympathetic to the plaintiff.
What to do instead
Use a fixed checklist on every tort stem: duty (standard of care owed), breach, actual cause, proximate cause, damages; only after all five are satisfied do you evaluate contributory or comparative negligence, assumption of risk, or immunities.