Casualty Insurance Basics: Liability Concepts and Policy Structure
Negligence and legal liability
To collect in negligence the claimant must prove duty (standard of care), breach, proximate cause, and damages. Related doctrines: negligence per se (statute violated), res ipsa loquitur (the thing speaks for itself), vicarious liability (employer for employee acts within scope), and strict/absolute liability (no fault needed, e.g., hazardous activities). Defenses include assumption of risk, comparative fault, and (for property) contributory negligence where still recognized.
Tennessee uses modified comparative fault: a claimant whose fault is 50% or more is barred; below that, recovery is reduced by the claimant's percentage. Damages are compensatory (special = economic, general = pain and suffering) and punitive (punishment, generally uninsurable).
Commercial general liability structure
The CGL uses Coverage A - Bodily Injury and Property Damage, Coverage B - Personal and Advertising Injury, and Coverage C - Medical Payments (no fault required, paid regardless of liability). Limits: each occurrence, general aggregate, products-completed operations aggregate, damage to premises rented, and a per-person medical payments limit. Supplementary payments (defense costs, bonds, lost earnings) sit outside the limits of liability.
Key concepts: occurrence vs. claims-made (claims-made needs a retroactive date and an extended reporting period); the expected or intended injury exclusion; the your product / your work exclusions; contractual liability; and additional insureds. Umbrellas sit over underlying policies and may drop down; excess policies do not.
Traps: believing med pay requires proof of fault (it does not); assuming defense costs erode the limit (they do not under the standard CGL); confusing an aggregate with an occurrence limit; and forgetting that employee injuries belong to workers compensation, not the CGL.
Rule of thumb: identify the coverage part (A, B, or C), then the trigger (occurrence date vs. claim date), then the limit that applies.