8.1 Negligence, Torts, and Legal Liability

Why Legal Liability Drives the Casualty Exam

A liability policy pays sums the insured becomes legally obligated to pay as damages because of bodily injury (BI) or property damage (PD) suffered by a third party. Before an insurer pays anything, the claimant must establish that the insured is legally liable. The casualty half of the Property and Casualty (P&C) exam therefore tests the legal concepts that create liability — torts and negligence — as heavily as it tests the policies themselves.

First-Party vs. Third-Party

Trap: If a question describes the insurer paying the named insured's own loss, that is first-party/property coverage, never liability.

Torts: The Three Categories

A tort is a civil wrong (other than breach of contract) for which the law allows a remedy in damages. Torts are the source of almost every liability claim.

1. Intentional torts — deliberate acts: assault, battery, libel, slander, false arrest, invasion of privacy. The ISO Commercial General Liability (CGL) form's Coverage B picks up specific intentional torts grouped as personal and advertising injury.
2. Negligence — unintentional carelessness. This is the basis of the vast majority of BI and PD claims and is covered under Coverage A.
3. Strict (absolute) liability — liability without fault. The plaintiff need not prove negligence at all.

Strict Liability — No Fault Required

Strict liability attaches to abnormally dangerous activities (blasting/explosives, storing toxic chemicals, keeping wild or vicious animals) and to defective products under product-liability law. Because fault is irrelevant, the usual negligence defenses (such as the insured exercised reasonable care) do not help.

Exam phrasing: "Strict liability requires no proof of negligence or intent." Recognize blasting and product defects as the classic triggers.

The Four Elements of Negligence (DBCD)

Negligence is the failure to exercise the degree of care a reasonably prudent person would use under similar circumstances. To collect, the plaintiff must prove ALL FOUR elements:

1. Duty — a legal obligation to exercise reasonable care, arising from a relationship, foreseeability of harm, or a statute (traffic laws, building codes).
2. Breach — failure to meet that standard (speeding, failing to salt an icy walk).
3. Causation (proximate cause) — the breach directly caused the harm.
4. Damages — actual, measurable harm occurred. No damages, no claim.

Causation: The Two-Part Test

• Cause in fact — the "but-for" test: but for the breach, would the injury have occurred?
• Legal cause — was the harm a foreseeable result, with no superseding intervening event?

An intervening cause that is foreseeable does not break the chain; a superseding cause that is unforeseeable does. Classic trap: a driver negligently parks, an hour later an unrelated tornado hurls the car through a window — the tornado is an unforeseeable superseding cause, defeating proximate cause.

The Reasonable-Person Standard and Special Doctrines

The yardstick for both duty and breach is the objective reasonably prudent person. The standard adjusts in two tested situations: professionals (doctors, attorneys, agents) are held to the standard of a reasonable member of their profession — the reason malpractice and E&O exist — and children are judged against a reasonable child of similar age, unless engaged in an adult activity such as driving.

Res ipsa loquitur applies when (1) the event would not normally occur absent negligence, (2) the instrumentality was in the defendant's exclusive control, and (3) the plaintiff did not contribute.

Negligence Per Se, Res Ipsa Loquitur, and Strict Liability

Beyond the four elements, the exam tests doctrines that shift how negligence is proven. Negligence per se treats violation of a safety statute (running a red light) as automatic breach of duty when the statute was meant to protect the injured class. Res ipsa loquitur ("the thing speaks for itself") lets a plaintiff infer negligence from an accident that ordinarily would not happen without negligence and was under the defendant's exclusive control — a surgical instrument left inside a patient.

Strict (absolute) liability imposes liability without fault for abnormally dangerous activities (blasting, keeping wild animals) and for defective products, where the manufacturer is liable regardless of how much care it exercised.

Duty, Breach, and the Categories of Tort

Recall that a tort is a civil wrong other than breach of contract, and the three categories are intentional torts (assault, battery, libel, slander, false imprisonment, trespass), negligence (the failure to exercise reasonable care), and strict/absolute liability. Liability insurance is built primarily to respond to negligence because intentional acts are typically excluded as not "accidental." The four elements — duty, breach, causation, and damages — must all be present; a plaintiff who proves a careless act but no actual damages cannot recover, which is why a near-miss with no injury produces no liability claim.