8.1 Negligence, Torts, and Legal Liability

Why Liability Concepts Dominate the National Exam

Liability insurance pays sums an insured becomes legally obligated to pay a third party. There is no liability claim unless the insured is legally responsible, so the exam tests when legal responsibility arises before it tests any policy form. The single most-tested doctrine is negligence, the basis of the Insuring Agreement in nearly every Commercial General Liability (CGL) and Personal Auto Policy (PAP) liability section.

Three Sources of Legal Liability

Legal liability can arise from any of three sources. Most general-liability claims are tort-based, but the exam expects you to distinguish all three.

Torts: Civil Wrongs

A tort is a civil wrong (other than breach of contract) for which the law allows a remedy in damages. Torts split into three categories:

• Negligence — unintentional failure to use reasonable care (the bulk of GL claims).
• Intentional torts — deliberate acts such as assault, libel, slander, false arrest. Bodily injury/property damage caused intentionally is excluded by the CGL, but Personal & Advertising Injury coverage (Coverage B) buys back libel/slander.
• Absolute (strict) liability — liability without fault for ultrahazardous activities (blasting, keeping wild animals) or under product-liability law.

The Four Elements of Negligence (DBCD)

Negligence is the failure to exercise the degree of care a reasonably prudent person would use under like circumstances. The plaintiff must prove all four elements — fail one and the claim collapses.

1. Duty — a legal obligation to meet a standard of care, arising from a relationship (driver to other motorists, store to customers).
2. Breach — failure to meet that standard (leaving a wet floor unmarked).
3. Causation — the breach was the proximate cause of the loss; an unbroken chain links the act to the injury.
4. Damages — actual, measurable harm. With no damages there is no negligence claim, no matter how careless the conduct.

Exam trap: "proximate cause" is not the closest cause in time — it is the cause that sets the chain of events in motion without which the loss would not have occurred.

Res Ipsa Loquitur and Negligence Per Se

Two doctrines shift the proof burden:

• Res ipsa loquitur ("the thing speaks for itself") — the injury is of a type that does not normally occur without negligence, and the instrumentality was under the defendant's exclusive control (a sponge left in a patient). The court infers breach, shifting the burden to the defendant.
• Negligence per se — violation of a statute (running a red light) that itself establishes breach, so the plaintiff need not separately prove the standard of care was unreasonable.

Proximate Cause vs. Remote Cause

Only the proximate cause triggers liability. An intervening cause that breaks the chain (an unforeseeable third-party act) can relieve the original party of liability. Foreseeability is the test the exam applies: a foreseeable intervening act does not break the chain.

The Four Elements of Negligence

Liability insurance responds when an insured is legally liable, and the most common basis is negligence. A plaintiff must prove all four elements:

1. Duty — a legal obligation to act with reasonable care toward the plaintiff.
2. Breach — failure to meet that standard of care.
3. Causation — the breach was the proximate cause of the harm (an unbroken chain of events).
4. Damages — actual, measurable injury or loss resulted.

Miss any one element and the negligence claim fails. The exam tests this by giving a scenario missing an element — for example, careless conduct that injured no one (no damages) — and asking whether negligence is established. Without all four, there is no liability for the policy to cover.

Categories of Torts and Standards of Care

A tort is a civil wrong (other than breach of contract) for which the law allows a remedy. Torts fall into three groups: intentional torts (assault, libel, false imprisonment), negligence (the unintentional failure to use reasonable care), and strict (absolute) liability (responsibility without fault for abnormally dangerous activities or defective products).

The standard of care is what a reasonably prudent person would do under the circumstances; professionals are held to the higher standard of their peers. Negligence per se arises when conduct violates a safety statute (running a red light), establishing breach automatically. Res ipsa loquitur ("the thing speaks for itself") lets a plaintiff infer negligence when the harm would not normally occur without it and the instrumentality was in the defendant's exclusive control.

Proximate Cause and Intervening Acts

Proximate cause requires an unbroken, foreseeable chain from the breach to the harm. An intervening cause that is unforeseeable can break the chain and relieve the original wrongdoer — but a foreseeable intervening act (a rescuer injured while helping) does not. The exam tests whether the harm was a foreseeable result of the breach.

Bases of Legal Liability Beyond Negligence

Legal liability arises from three sources the policy may respond to: torts (negligence and intentional wrongs), contracts (liability assumed by agreement, such as a hold-harmless clause), and statutes (liability imposed by law, like workers' compensation or dram-shop acts). Absolute (strict) liability imposes responsibility without proof of fault for inherently dangerous activities (blasting) and defective products. A dram-shop statute can make a tavern liable for serving an intoxicated patron who later causes harm.

Identifying the source of liability tells you which policy — general liability, contractual, or a statutory cover — must respond.