Casualty Insurance Fundamentals
Liability rests on legal fault
A casualty claim requires legal liability. Negligence needs duty, breach, proximate cause, and damages. Compensatory damages are special (medical bills, lost wages - provable) and general (pain and suffering); punitive damages punish and are generally uninsurable as against public policy. Liability can arise without fault through absolute or strict liability, vicarious liability for the acts of others, and assumed contractual liability. Defenses include contributory and comparative negligence, assumption of risk, and immunities. New Hampshire follows a modified comparative negligence rule: the claimant's recovery is reduced by their own percentage of fault and is barred once that percentage crosses the statutory threshold, so a 50/50 split still produces a recovery.
How liability policies respond
The duty to defend is broader than the duty to pay and is triggered by the allegations in a complaint, not by the actual facts. Supplementary payments - defense costs, bonds, lost earnings - usually sit outside the limit on liability forms but inside the limit on many professional, D&O, and cyber forms. Occurrence policies respond to injury or damage during the policy period; claims-made policies require the claim be made during the period and reference a retroactive date. Limits may be per person, per occurrence, or aggregate.
Worked example
A CGL with a $1,000,000 each-occurrence limit and defense outside the limits faces a $1,400,000 judgment. Defense costs do not erode the limit, but indemnity is capped at $1,000,000; the insured is exposed for the remaining $400,000.
Traps
Assuming defense costs always erode limits; confusing occurrence with claims-made and reported; and overlooking exclusions for intentional acts, employee injuries (workers compensation is the exclusive remedy), and damage to the insured's own product or work.