Casualty Insurance and Liability Basics
Liability rests on tort law
A liability policy promises to pay sums the insured is legally obligated to pay as damages because of bodily injury or property damage, plus a duty to defend. The duty to defend is broader than the duty to indemnify - a suit alleging a covered act triggers defense even if the claim later proves groundless or excluded.
Negligence requires duty, breach, proximate cause, and damages. Know the defenses: contributory negligence (any fault bars recovery in a few jurisdictions), comparative negligence (pure, or modified with a 50%/51% bar), assumption of risk, and immunities. Res ipsa loquitur and negligence per se shift the proof burden. Strict liability applies to products, wild animals, and abnormally dangerous activities; absolute liability describes statutory schemes such as workers compensation; vicarious liability holds one party responsible for another's acts (employer/employee, family purpose doctrine).
Intentional torts - libel, slander, false arrest, malicious prosecution, invasion of privacy - are usually excluded, but coverage may be restored for some personal and advertising injury offenses.
Damages. Compensatory damages split into special (medical bills, lost wages - easy to document) and general (pain and suffering). Punitive damages punish and are commonly excluded. Medical payments coverage pays regardless of fault, subject to a small limit, and does not require negligence.
Limits and triggers. Split limits read per person/per occurrence; combined single limits are one pool. Occurrence policies respond to injury during the policy period; claims-made policies respond when the claim is made and depend on the retroactive date (with tail/extended reporting available). A reservation of rights letter preserves the insurer's coverage defenses; defense costs typically sit outside the limit; insureds usually may not settle without consent.
Massachusetts note: the state uses modified comparative negligence - a plaintiff barred only when negligence exceeds the defendant's - so a 50/50 plaintiff still recovers, reduced by their percentage.