Casualty Insurance Basics, Liability Concepts, and Negligence
Negligence and legal liability
Liability insurance pays third parties on behalf of an insured who is legally obligated because of bodily injury or property damage. The foundation is negligence: duty (reasonable care), breach, proximate cause, and damages. Res ipsa loquitur allows an inference of negligence when the instrumentality was in the defendant's exclusive control; negligence per se arises from violating a safety statute. Defenses include contributory negligence (a complete bar in a few states), comparative negligence (pure or modified), and assumption of risk. Vicarious liability holds an employer responsible for employees acting within scope. Strict liability applies to abnormally dangerous activities and products.
Policy mechanics
Occurrence policies cover injury that occurs during the policy period; claims-made policies cover claims reported during the period, with a retroactive date and extended reporting periods. Limits may be split (per person/per occurrence) or a combined single limit. Defense costs are usually in addition to the limit, and supplementary payments (bail, appeal bonds) do not erode limits - though defense-inside-the-limit forms exist.
Common exclusions
Intentional injury, contractual liability (except insured contracts), care, custody, and control of property, pollution, professional services, and damage to the insured's own product or work.
Traps
The insured's own property is excluded - liability protects others. Punitive damages may be insurable in some states and not others. An additional insured's protection is usually narrower than the named insured's.
Rule of thumb: no duty, no negligence; no damages, no claim.