Casualty Insurance Basics and Coverages
Liability fundamentals
Negligence requires duty, breach, proximate cause, and damages. Liability can also arise without fault (workers compensation, certain statutes) or vicariously (employer responsible for employees acting in scope). The commercial general liability policy uses three insuring agreements: Coverage A bodily injury and property damage, Coverage B personal and advertising injury, and Coverage C medical payments (no-fault, short reporting window). Limits include each occurrence, general aggregate, products-completed operations aggregate, damage to premises rented, and medical expense. Supplementary payments - defense costs, bail bonds, and loss-of-earnings reimbursements - are paid in addition to limits.
Auto and other casualty lines
Know the personal auto policy parts: A liability, B medical payments, C uninsured/underinsured motorists, D coverage for damage to your auto (collision and other than collision). The business auto policy uses covered auto symbols 1–9 to define which vehicles are insured. Umbrellas sit over underlying policies, may drop down when underlying coverage is exhausted, and often carry a self-insured retention.
Traps
- Occurrence policies respond based on the date of loss; claims-made policies respond based on when the claim is made and reported, subject to a retroactive date.
- Professional liability (errors and omissions) and employment practices are excluded by the CGL.
- A certificate of insurance is evidence of coverage only - it does not amend the policy.
- Intentional acts and, in most states, punitive damages are not covered.
Worked example
With $1,000,000 each occurrence and a $2,000,000 general aggregate, two claims of $800,000 leave $400,000 of aggregate. A third claim of $500,000 pays only $400,000.