Analysis and Evaluation of Risk Exposure - Risk Exposure from Liability

LIABILITY
Generally, liability insurance is designed to offer specific protection against third party claims. It differs from typical risk transference insurance as payment is typically not made to the insured, but rather to someone suffering loss that is not a party to the insurance contract. The liability portion of a homeowner's policy is designed to cover unintentional injuries on the premises and unintentional damage to other people's property. In other words, injuries caused by your negligence are covered; those you inflict on purpose are not covered.

Negligence
Liability insurance is a compulsory form of insurance for those at risk of being sued by third parties for negligence.
Definition: Negligence is the failure to use reasonable care. The performance of something which a reasonably prudent person would not do, or the failure to do something which a reasonably prudent person would do under like circumstances is considered negligence. A departure from what an ordinary reasonable member of the community would do in the same community.

Intentional Torts
An intentional tort is a deliberate act that causes harm to another, for which the victim may sue the wrongdoer for damages. If the intentional torts is an act that can be prosecuted or cause arrest under current law- they are typically not covered by insurance contracts; therefore, the best risk protection method is risk avoidance.

Intentional torts involving people:

  • false imprisonment
  • invasion of privacy
  • malicious prosecution
  • defamation
  • battery
  • assault

Intentional torts involving property:
  • harm to goods or land through trespass
  • nuisance
Strict Liability
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