Casualty insurance basics and liability concepts
Liability basics
Liability insurance responds to legal liability for bodily injury, property damage, or specified personal and advertising injury. Negligence requires duty, breach, causation, and damages. Proximate cause links conduct to harm. Compensatory damages include economic and noneconomic losses; punitive damages may be insurable only where law permits. Vicarious liability makes one party responsible for another, such as an employer for an employee. Strict liability applies to certain activities or products without proof of negligence. Contractual liability arises from an assumed contractual obligation.
Policy mechanics
Read the insuring agreement, definitions, exclusions, and limits. Occurrence policies cover injury or damage during the policy period. Claims-made policies add a retroactive date and reporting requirements. Per-occurrence and aggregate limits operate differently. Additional insured status is narrower than being a named insured.
Traps
Commercial general liability does not cover employee bodily injury, the insured's own property, or most auto liability. Intentional acts are usually excluded, though resulting damage may be disputed. Do not treat every contract as covered. Do not confuse medical payments, which may pay without fault, with liability coverage.
Worked example
A delivery employee injures a customer while unloading. The employer may face vicarious liability. Commercial auto may respond to vehicle use, general liability may respond to premises or operations, and workers compensation may cover the employee. Rule of thumb: identify the claimant, the alleged legal duty, the injury, and the policy that covers that exposure.