Casualty Insurance Basics and Personal Casualty Coverages
Liability fundamentals
Negligence requires duty, breach, proximate cause, and damages. Defenses include contributory or comparative negligence and assumption of risk. Liability may also be absolute (statutory, such as workers' compensation), vicarious (employer for employee acts in scope of employment), or contractual. Damages are compensatory - special (medical, lost wages) and general (pain and suffering) - or punitive. Liability policies pay on behalf of the insured, provide a defense, and pay supplementary payments outside the limit of liability, a favorite test point.
Personal auto policy (PAP)
Four parts: A – Liability; B – Medical Payments; C – Uninsured/Underinsured Motorist; D – Damage to Your Auto (collision and other than collision). Related coverages: transportation expenses, towing and labor, and extended non-owned auto. Key exclusions: intentional acts, racing, livery or delivery use, and vehicles furnished for regular use. A non-owned auto used occasionally for personal purposes is covered; a car provided for regular use is not.
North Carolina requirements
Drivers must carry liability limits of at least 30/60/25 plus uninsured motorist coverage. North Carolina is an at-fault, tort state - not a no-fault/PIP state - and proof of financial responsibility is required at registration and on request.
Other personal casualty
Homeowners Section II liability, personal umbrella policies (excess over underlying auto and homeowners limits after a self-insured retention, excluding business and intentional acts), and inland marine floaters for valuables.
Traps
Assuming Med Pay requires fault; assuming UM pays to repair the insured's own car (it does not); confusing supplementary payments with the limit of liability.
Rule of thumb
If a claim is about the other person's injuries, think liability. If it is about your own occupants' bills regardless of fault, think Med Pay.
Worked example. A passenger in the insured car is hurt when the driver runs a red light. Med Pay responds regardless of fault, and the other driver's liability coverage may also respond if that driver was negligent.