Casualty Insurance Basics
Liability is legal liability
Liability insurance pays sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage. Negligence requires duty, breach, proximate cause, and damages. Defenses include comparative negligence, assumption of risk, and statutes of limitation. Vicarious liability (employer for employee acts), strict liability (products, wild animals, abnormally dangerous activities), and contractual liability round out the field.
Occurrence versus claims-made
An occurrence policy responds when the injury or damage happens, whenever the claim is later filed. A claims-made policy responds only if the claim is made during the policy period, with a retroactive date limiting how far back coverage reaches and an extended reporting period available afterward.
Limits and defense
Limits may be a single per-occurrence amount, an aggregate, or split limits expressed as per person / per accident / property damage. Medical payments coverage pays small medical bills regardless of fault. In the standard commercial general liability form, defense costs and supplementary payments are paid in addition to the limit - a classic trap. The duty to defend is broader than the duty to indemnify and ends when the limit is exhausted.
Worked example: split limits $100,000/$300,000/$50,000. Two claimants each with $150,000 in injuries collect $150,000 each (each is under the $100,000 per-person cap? No - that exceeds it), so each is capped at $100,000 and the $300,000 per-accident limit is not exhausted. Three such claimants would share only $300,000 in total.
Other insurance
Primary coverage pays first; excess and umbrella coverage respond above it, and an umbrella may drop down over gaps with a self-insured retention.