MARINE INSURANCE SERVICES
PO BOX 224, MIDLAND, ONTARIO, L4R 4K8, (705) 526-9541, FAX (705) 526-1294

STUDY 1  INTRODUCTION TO LIABILITY INSURANCE

Liability: responsibility by virtue of use or ownership of something; Imposed by law on individuals, corporations, and governments; deters irresponsibility.

Liability is Imposed by Law: the law imposes liability in several ways:
· Negligence: when someone commits a tort (wrong) against another person, causing damage or injury; may be intentional act, negligent act, or failure to act. Tort: wrong done to another in breach of a duty laid down by law, other than a breach of contract.
· Private Nuisance: substantial and unreasonable interference with an occupier’s use and enjoyment of the land being occupied.
· Public Nuisance: substantial and unreasonable interference with a public right (right common to all members of a community or class); created when a private nuisance affects a large number of persons.  Only the Attorney General, as representative of the public, may bring action.
· Breach of Contract: liability imposed by person(s) who break a contract.

CANADIAN LAW: Jurisdiction: division of governmental power:
Federal Govt.: (Canada Act) military, foreign relations, currency, postal services.
Provincial Govt.: (Constitution Act) property rights, education, insurance.
Municipal Govt.: authorized by provincial governments to carry out certain functions within their boundaries.

Courts: Courts interpret laws enacted by government.

Civil Courts: type depends on $ amount sought by plaintiff:
· Small Debts Court
· County or District Court
· Supreme Court
· Provincial Appeals Court (final recourse)

Criminal Courts: type depends on type of offense and regulations of the Criminal Code.  Several levels exist + Federal Court of First Recourse + Federal Appeal Court + Supreme Court of Canada (Highest).

Criminal Law: a crime is an act against society prohibited by statute; the Criminal Code outlines penalties for crimes, including jail, fines probations.

Civil Law: for non-criminal disputes between 2 individuals, corporations, or governments; Civil Court awards damages.  Civil Law is the subject of insurance.

Civil Code (Quebéc): legal system derived from France * Civil Code of Lower Canada (1865) * Civil Code of Quebéc (1981) * Civil Code of Quebéc totally revised in 1993.  Written statute specifies legal rights & obligations of individual.  Articles 1457 to 1481 regulate civil litigation.  Not necessary in this system to rely on precedents.

Common Law (Rest of Canada): derived from Britain; doctrine of precedent reinforces previous similar judgments.  Statute Law supercede Common Law precedents (Case Law).

STUDY 2  NEGLIGENCE—THE A.B.C. RULE (COMMON LAW)

The A.B.C. Rule: plaintiff in a negligence action must prove:

A. A Duty of Care Exists:

(1) Statute Law Duty of Care: R. in Right of Canada v. Saskatchewan Wheat Pool (1983): sets out the rules for a person to prove a negligence claim based on breach of statute by another:
· The statute must have been breached
· The conduct which was the breach of statute must also have caused the damage for which compensation is sought
· The statute must have been intended to prevent the damage which occurred
· The person making the claim must be among the group which the statute was intended to protect

(2) Common Law and Duty of Care:

Negligence: Blyth v. Birmingham Water Works Co. (1856): “the omission to do something which a reasonable man would do guided by those considerations which ordinarily regulate the conduct of human affairs, or doing something which a reasonable and prudent man would not do.”

Reasonable Person: Arland v. Taylor (1955): “an average or ordinary person under given circumstances, normal intelligence and foresight, uses prudence to guide his actions.”

Duty to Your Neighbour: Tort Law requires a person to compensate another for the reasonably foreseeable results of his negligence.  Donoghue v. Stevenson (1932), ginger beer with snail inside, purchaser gave this to a friend who drank it, can still sue manufacturer even if no contract exists.

Occupiers’ Duty of Care:
(1) Strangers who do not enter the premises or land: occupier must keep property free of danger for highway.
(2) Owners and occupiers of adjoining property: Strict Liability, no need to prove negligence for damage to adjoining properties.
(3) Trespasser: least responsibility; no consent; wrongful entry; owner can’t set traps.  Veinot v. Kerr—Addison Mines Ltd. (1985): list of factors to determine if occupier’s duty to trespassers had been breached.
(4) Licensee: has consent, no interest in property, occupier must protect from known dangers.
(5) Invitee: most responsibility; mutual gain, e.g. customer in store, occupier must exercise reasonable care to protect.
(6) Contractual Entrant: person enters onto premises under contract with occupier (e.g. hotel guest).  Carriss v. Buxton (1958): duty of care may be written or implied safe for the purpose with reasonable care.

Owners’ and Occupiers’ Liability: Occupier (not the owner) is usually liable for injured persons; occupier may be able to recover damages from owner if injury caused by lack of repair.  In some provinces, a single duty of reasonable care towards all visitors exists (reduced where visitors voluntarily assume the risk).  Landlords are responsible for common areas of building.

Children: higher standard of care; property must be safe even for a trespassing child; attractive nature = Allurement.  The Occupier (not necessarily owner) held liable, e.g. Tenant.  Common Law Legislation: in some places there is only a single duty of care.

Parents Liability: minors liable for tort unless too young to know better.  Parents not responsible for negligence of children unless children acting on parent’s instructions, authority, child employed by parent, or parent allows child to control dangerous object (like an automobile).

Bailees’ Duty of Care: bailees of property have a higher duty towards property in their care.
Contractual Duty: contract specifies duties of all parties; liability imposed under breach of contract is not usually covered by insurance.  Hold Harmless and Indemnity provisions transfer liability.  Prima facie case involves evidence which is presumed to be true unless evidence is presented to the contrary.

B. There was a Breach of that Duty: Polemis v. Furness Withy & Co. Ltd.: previous case which determined that negligent party could be held liable for damages even if not foreseeable.  Overseas Tankship (U.K.) Ltd. v. Mort’s Dock and Engineering Co. Ltd. (1961) overrules the above; defendants not liable for unforeseeable (remoteness) damages.

C. Damage was Caused by That Breach:
Proximate Cause Rule: for a victim to be able to collect damages from a tortfeasor, there must exist an uninterrupted unfolding of events without the intervention of another main cause from the initial act to the conclusion.

Damages:
(1) Special: out of pocket expenses; doctor’s bills, lost salary, etc.
(2) General: calculated by judge; pain & suffering, future expenses, economic losses, etc.
(3) Nominal: negligence but no real damages, award usually $1.
(4) Punitive (Exemplary): additional award as punishment, not covered by insurance.

STUDY 3  DEFENCES AGAINST NEGLIGENCE IN COMMON LAW

Defences for Tort:
1. Denial: defendant proves not negligent or no damages.
2. Compliance with Statute: defendant must prove there was no negligent conduct and that he has complied with statute.  Bux v. Slough Metals Ltd. (1974): employer who provided safety goggles and knew employees rarely used them was found negligent for injury.
3. Remoteness of Damage: negligence not proximate cause.
4. Inevitable Accident: defendant must prove damages from cause beyond his control.  Ryan v. Youngs (1938): driver of vehicle had heart attack and no previous medical experience.
5. No Duty Owed: e.g. trespassers.  Palsgraf v. Long Island Railroad Co. (1928): damage beyond the range of foreseeable danger.
6. Emergency: danger to defendant not his fault & reasonable attempt to rid danger.
7. Act of God: damage from act of nature with no human interference.
8. Voluntary Assumption of the Risk (Volenti Non Fit Injuria): e.g. sporting events.   Waldick v. Malcolm: plaintiff must have had knowledge of risk & waived rights of legal claim.
9. Contributory Negligence: plaintiff responsible for some or all damages, partial defence.
10. Disclaimer: agreement where Plaintiff knowingly renounces right of recovery.
11. Limitation Period: legal time limit for action.

OTHER PRINCIPLES:
Burden of Proof (Onus Probandi): first plaintiff must prove negligence, then onus shifts to defendant.  Exceptions (onus on defendant):

• Onus changed by statute
• Bailees
• Res Ipsa Loquitur (the thing speaks for itself)
• Absolute liability
• Scienter
• Strict liability

Absolute Liability: defined by statute; situation whereby no defence exists (e.g., Environmental Protection Act places absolute liability on person in control of substance that is spilled and causes damage to environment).

Scienter: Domestic Animals: owner not responsible unless he knew of dangerous propensities; legislation has precedence.  Wild Animals: keep at own peril; plaintiff not required to prove negligence (Strict Liability).

STUDY 4  NEGLIGENCE—THE ABC RULE (QUEBÉC)

The A.B.C. Rule: Plaintiff in a negligence action must prove:

A. A Duty of Care Exists: Civil Code of Quebéc (C.C.Q.) articles:

1) Civil Code and Statute Law Duty of Care: 2283—depository shall act with prudence and diligence in the safekeeping of property; 2138—mandatory is bound to fulfill the mandate he has accepted and he shall act with prudence & diligence.

2) ‘Common Law’ Duty of Care: 1457-1469 defines delictual liability for one’s actions, others’ acts, damages caused by things (animals, buildings), and manufacturer’s actions.
Extracontractual Liability: (Extracontractual Prejudice: consequence of wrongful act).
i) Liability for one’s own negligence: Article 1457 defines negligence.
ii) Liability for Others’ Negligence or Acts: Article 1457: person can sometimes be held liable for actions of others. 1459: parents held accountable for actions of children unless parent can prove he did not commit any fault in custody, supervision & education.  1460: custodians responsible for minor.  1461: Tutors/Curators not responsible for person of age of majority.  1462: insane persons not responsible.  1463: principals liable for actions of agents & servants.
iii) Liability for One’s Things, Animals or Buildings: 1465 Things: A person entrusted with custody of an object is liable for resultant injuries, unless he proves he is not at fault; city of Montreal v. Watt & Scott (1922): sewer pipe broke, city held liable for damages as the pipe and the contained water were things under its custody.  1466 Animals: owner & user of animal are liable for injuries caused by animal.  1467 Property: owner of property liable for injury caused by its ruin.
iv) Manufacturer’s Liability: Articles 1468, 1469, 1473 Kravitz v. General Motors (1979): manufacturer liable for latent defects to vehicle for any subsequent buyer.  Véranda Industries Inc. v. Beaver Lumber (1992): manufacturer and retailer both held responsible for latent defects.
v) Contractual Liability: Article 1458: every person has duty to honour his contractual undertakings; where he fails in this duty, he is liable for injury/damage.  Wabasso Ltd. v. National Drying Machinery Co. (1981) and McDonnell Douglas Corp. v. Air Canada (1989): enabled parties to sue under tort or contractual law, whichever more favourable.  Banque Nationale du Canada v. Houle (1991) and Banque Nationale v. Soucisse (1981): abuse of right in contractual matters.  No right can be exercised with the intent of injuring another in an excessive and unreasonable manner contrary to good faith.

B. There was a Breach of That Duty: plaintiff must prove that defendant breached one of the above duties.

C. Damage was Caused by that Breach: doctrine of Proximate Cause applies.  Articles 1611-1616 dictate types of damages for delictual & contractual liability cases.  Structured settlements possible and claims not closed for 3 years.  Claims against minors not closed until 3 years after age of majority.

Damages: General and Punitive (Exemplary) only.

STUDY 5  DEFENCES AND NEGLIGENCE CASES (QUEBÉC)

Liability for One’s Negligence: Defenses:
(1) No Negligence: rules of conduct were respected.
(2) Not Endowed with Reason: insane.
(3) Superior Force: Article 1470: unforeseeable and irresistible event (Act of God).
(4) Good Samaritan: every person must come to the aid of anyone whose life is in peril, unless there is some danger or other valid reason.  The person cannot be held liable for damages done unintentionally while assisting this endangered person.
(5) Notice: warnings of danger, not limits of obligation; only if injured person was aware of the notice.

Liability for Others’ Negligence or Acts: Strict Liability unless defendant can prove:
(1) Not at Fault (Tutors)
(2) Not at Fault or Not Autonomous Action of Object (Person entrusted with custody of a thing)
(3) Victim’s Fault (Animals)
(4) Ruin not from Lack of Repair or Defect of Construction (Property)

Manufacturer’s Defences: voluntary assumption of the risk, existence of safety defect could not have been known, not negligent in providing information of safety defect.

Voluntary Assumption of the Risk and Contributory Negligence of the Victim: these are not complete defences, liability may be shared.

Joint and Several Liability: if more than 1 person responsible for offenses, each or all can be held liable for total damages; only to extent of indemnity.

Limitation Period: Article 2925: plaintiff has 3 years from date of accident to file suit.  Libel actions must begin within the year in which the defamed person learned of the defamation.

STUDY 6  GENERAL LEGAL PRINCIPLES

Proximate Cause: immediate and effective cause of loss; Scott v. Shepherd (1773) Squib Case.  Laperrière v. The King (1946): liable for foreseeable injury.  Beaudoin v. T.W. Hand Fireworks (1961): negligence not proximate cause (remoteness of damage).

Joint Tortfeasors: victim can sue one or all offenders, collects only once; any one offender can be held liable for total amount.

Joint and Several Liability: if more than 1 person responsible for offenses, each or all can be held liable for total damages; only to extent of indemnity and less proportion due to contributory negligence.  The remaining tortfeasors can then be sued by defendant.

Vicarious Liability: responsibility for the acts of others.

Agency: agent can bring principal into contracts with third parties, 3 types:
(1) Principal & Agent (Common Law): agency established by:
· Contract (Express): besides the stated conditions of the contract, agent is liable for ostensible authority (normal duties) including fees, no negligence, no delegation of authority, utmost good faith.  Principal bound (to third parties) by agent, but can sue agent.
· Ratification: agent acts on principal’s behalf without permission but principal later approves.
· Estoppel: principal cannot today accept an agent and later reject him on a similar matter.
· Necessity: carrier of perishable goods can dispose at best price if necessary.
(2) Mandator & Mandatory (Quebéc): Articles 2130-2185: Mandator liable to third parties for all obligations contracted by Mandatory; like above.
(3) Employer & Employee (Master & Servant in Quebéc): employer liable to third party, vicarious liability in tort, respondeat superior (let the superior be responsible).
· Liable for acts employee authorized to do and the way they are performed
· Liable for forbidden acts if common method of performance; Lockhart v. C.P.R. (1941)
· Not liable for employee if not work related
· Not liable if employee uses premises without permission
· Employer may sue employee
Employers Liability to Employees: work place must be safe, must select competent employees.  Employee cannot receive employer if entitled to receive Worker’s Compensation benefits.  Employer may be liable if no Worker’s Compensation, no contributory negligence from employee, no voluntary assumption of the risk from employee, and damages not caused by fellow employee.  Worker’s Compensation does not apply to all professions, other employers can purchase Employers Liability Insurance or rely on self-insurance.
(4) Principal & Independent Contractors: principal not responsible for damages, not supervised work.  Exceptions: dangerous work e.g. blasting, unlawful work, principal supplies defective tools/materials resulting in damages, Davie Shipbuilding v. Cargill Grain (1978): interference by principal affecting operations.

Municipal Liability: obligations created by statute for municipality (Tock v. St. John’s Metropolitan Area Board (1989): tort/negligence or nuisance); types:
· Misfeasance: improper performance of legal act; e.g. improper installation of sidewalk.
· Nonfeasance: omission to do act which by law must be done, e.g. failure to repair sidewalk.
· Malfeasance: doing unlawful thing, e.g. police firing weapon unnecessarily.
Municipal Liability Limitation Periods: vary by province; Norwell v. Toronto (1925).
Quebéc Municipal Liability: municipality is liable like an individual under torts and statutes.

Class Action: 1 member of group can sue for benefit of all members; must obtain court authorization; each member of class must have ‘same’ interest; claim against a discernible fund or asset.
Class Actions in Quebéc: Class Action (Act): govt. fund gives financial assistance to Plaintiffs, requires:
· Prior authorization of Superior Court
· Plaintiff member shows interest of group
· Plaintiff member competent to represent group
· 3 month time limit, usually
· Court binds group
· Court determines $ owed
· Court determines method of payment & collects
· Publication of notice
· Member can file claim within 1 year of publication of notice
· Appeal of final judgment

Limitation Periods: Federal or Provincial statutes, vary from 6 months to 30 years (from date of loss), e.g. auto. 2 years, tort 6 years.

Interest: trial time varies; interest paid on sums awarded, from date of judgment to payment date (Quebéc from date suit filed).  Rate set by legislation (not banks or market).
Prejudgment Interest: on money owed accrues from due date not recovery date at trial.  Non-pecuniary interest from date of notice of claim.
Postjudgment Interest: varies by province; usually from date judgment rendered.

STUDY 7  PRODUCTS LIABILITY AND ITS EFFECTS

Ladder of Supply: Manufacturer * Manufacturer’s Agent * Distributor * Wholesaler * Retailer * Purchaser * Consumer/User.  Any of these could be responsible for damages.

Contract Theory (Privity of Contract): originally only parties to contract could sue; consumer could sue purchaser for instance; no ‘rung-jumping’.  Contract: an agreement enforceable by law (including insurance); 2+ persons agree to do, or refrain from doing, some specific act.

Tort Theory: now, can sue anyone on ladder of supply.  McPherson v. Buick Motor Co. (1916): injured party sued manufacturer, Buick had defectively made car, dealer could not have been responsible.  Buckley v. Mott (1920): powdered glass in chocolate bar.  Donoghue v. Stevenson (1932): ginger beer with snail inside, purchaser gave to friend who drank it, can still sue manufacturer even if no contract exists.

Dangerous Products: manufacturer has duty to purchaser and anyone else his product could damage.  For objects of dangerous nature, manufacturer has heavy onus (Extended Duty of Care) which alleviates liability of others in ladder of supply.  Manufacturer must give appropriate warnings on products, e.g. drugs.  Burden of Proof: generally Plaintiff must prove negligence or res ipsa loquitur.  Strict Liability applies for dangerous products or where defect is necessarily from the manufacturing process.  Lambert v. Lastoplex Chemicals Co. (1972): dangerous products, weed killer, failure to warn of possible damages to adjacent crops.

Product Defects: if manufacturer discovers defect in product (at any time), must warn consumers, & recalls.  Rivtow Marine Ltd. v. Washington Iron Works (1973): failure to notify consumers of defect in crane.

Allergic Reaction: some compounds that are safe for most people will produce allergic reactions in others; risk is more acceptable for beneficial drugs.  Manufacturers must warn of possible allergic reactions on the label.

Suit in Contract (Warranty): breach of contract of sale or warranty, product not fit for intended purpose.  Can recover from seller (except brand name products) without proof of negligence (Strict Liability).  Warranty available only to 1 buyer (Privity of Contract).  Products Liability insurance does not cover deliberate actions of Insured.

STUDY 8  STANDARD CGL POLICY

COMMERCIAL GENERAL LIABILITY (CGL) FORM: 2 parts
(1) Declarations:
· Named Insured: benefits, duties, obligations, address, operating premises address
· Policy Period: usually annual
· Insurance Limits: $ value in each of 5 Sections
· Form of Business: legal nature of Named Insured
· Business Description: type of business of Named Insured
· Location of owned/rented/occupied premises; liability covered for all premises of Named Insured within territory limits
· Classification: Insurer’s statistics., premium, claims
· Minimum Premium: $ value, covers processing costs if insurance canceled
· Total Premium: advance (lump sum) premium = sum of deposit premiums (installments)
· Endorsements: form numbers added
· Countersignature: signed by broker & usually insurance company CEO

(2) Coverage Wording:
Section 1 Coverages:
Coverage A, BI & PD Liability:
· Must be legal obligation to pay (no voluntary payments)
· Compensatory damages—not punitive
· Bodily Injury: injury, sickness, disease, death—extended beyond policy period
· Property Damage: damage to tangible property including loss of use
· Territory: Canada & US, territories & possessions
· Exclusions: intentional injury (willful or reckless nature), contractual liability, Worker’s Compensation or similar laws, employers liability to employees, automobile coverage, watercraft owned by Insured off premises, aircraft, airport/aircraft landing area, PD from personal property under Insured’s care/custody/control, damage from Insured’s own products (business or trade risks), completed operations hazard, PD from impaired property, product recall costs.

Coverage B, Personal Injury Liability:
· Covers injury to person other than BI, i.e., injury to character, reputation.
· Exclusions: actions prior to effective date of insurance (known falsities), willing actions of Insured, willful action of Insured against statute/ordinance, contractual liability unless contract is such that liability would have existed anyway.

Coverage C, Medical Payments: liability not required.
· BI caused by accident on or adjacent to Insured’s premises or from Insured’s operations.  Expenses must be incurred and reported within 1 year.  Medical exams at request.  All reasonable expenses paid.
· Exclusions: any Insured/employees/tenants, injuries on premises normally occupied by injured, Worker’s Compensation, athletic events, payment prohibited by law, products/completed operations hazard, exclusions under Coverage A.

Coverage D: Tenants’ Legal Liability.

Common Exclusions for Coverages A,C,D:
(1) Pollution Liability: environmental impairment.  Pollutants: any solid, liquid, gaseous or thermal irritant or contaminant, includes waste (materials to be recycled).  Still covered are: (i) products, (ii) completed operations, (iii) off-site coverage for contractors, (iv) hostile fire (one that becomes uncontrollable or breaks out from where it is intended to be).
(2) Nuclear Energy Liability: BI/PD from ownership, maintenance, or operation of nuclear facility, or transport, consumption, disposal of radioactive material.  Coverage is available from the Nuclear Insurance Association of Canada (NIAC) pool.
(3) War Risks: BI/PD from war, invasion, foreign enemy, hostilities, civil war, rebellion, revolution, insurrection, military power.

Supplementary Payments for Coverages A,B,D: in addition to amount of insurance, Insurer pays:
· Expenses incurred by Insurer, e.g. independent adjuster fees.
· Cost of bonds provided (to limit) but not provision of bonds (i.e., Insurer pays premium on bond but not bond itself).
· Reasonable expenses lost by Insured at request of Insurer up to $100/day, e.g. time off work to attend court hearing.
· Costs & postjudgment interest against Insured to limit of insurance.

Section II, Insured Defined: person in declarations, individual or spouse, partnership or joint venture members & spouses, organization & its executive officers and shareholders; also includes employees for acts of such employment, Insured’s real estate manager, person having temporary custody of subject matter after death of Insured with regard to maintenance/use until legal representative appointed; also includes newly acquired or formed organizations.

Section III, Limits of Insurance: $ amounts shown on declarations page are the maximum amounts regardless of # of Insureds, # claims, # actions, or # of claimants.  Occurrence Limit: maximum payable for 1 occurrence for A,D,C.  Personal Injury Limit: maximum payable for personal injury to any 1 person or organization.  Tenants Legal Liability Limit: maximum payable for PD to 1 premises.  Medical Expense Limit: maximum payable for 1 person.  *Aggregate Amount: overrides above; total amount payable in 1 policy period.

Section IV, Conditions:
(1) Bankruptcy: Insurer still obligated to duties of insurance even if Insured bankrupt or insolvent.
(2) Canadian Currency Clause: all $ amounts in Canadian funds.
(3) Cancellation: Insurer can cancel with 15 days notice for non-payment of premium, and with 30 days notice for other reasons.
(4) Changes: named Insured can change policy with Insurer’s consent by endorsement.
(5) Duties in event of Occurrence/Claim/Action: reporting claims/information req’d; no voluntary payments; no assumption of obligation/expense without consent.
(6) Examination of Books/Records: Insurer can inspect during policy period and up to 3 years after expiry to determine financial stability.
(7) Inspections/Surveys: determine physical characteristics of risk.
(8) Legal Action Against Insurer: action permitted only within 1 year after judgment or settlement (3 years in Quebéc).
(9) Other Insurance: Contribution Clause, may be primary, excess or pro rata.
(10) Premium Audit: after audit, if excess premium is required, it is collected by Insurer, if excess premium was paid, it is refunded by Insurer.
(11) Premiums: paid by 1st named Insured, who is also the payee for excess.
(12) Representations: Utmost good Faith required by Insured.
(13) Separation of Insureds, Cross Liability: if 2+ Insureds, each Insured has separate policy, limit remains the same, Insureds can sue each other.
(14) Subrogation: standard subrogation clause.
(15) Assignment: transfer of rights/duties requires Insurer’s consent.

Section V, Definitions:
· Action: civil proceeding (not criminal), including arbitration.
· Automobile: concise as to exclusion from CGL policy.
· Bodily Injury: includes sickness & disease.
· Coverage Territory: Canada + USA, territories & possessions, travel between Canada % USA covered by sea & air.  Includes products which cause damage away from Canada & USA (anywhere in world).
· Impaired Property (Sistership): product or work of Insured is part of other property and overall property or work is impaired as a result.
· Insured Contract: clauses a-f, incidental contracts, common usage—do not add significant exposure, automatically included.  Clause (g) adds to exposure, cover limited to tort of other party, not including professional liability.
· Occurrence: accident and/or continuous happening.
· Personal Injury: false arrest, detention, imprisonment, malicious prosecution, wrongful entry, libel & slander, violation of privacy.
· Products/Completed Operations Hazard: for coverage, product must be away from insured premises & left Insured’s possession, operation completed or abandoned.  Product Loss: product breaks down while owned by consumer.  Operations Loss: product damaged while being repaired.  Completed Operations Loss: product damaged due to improper repair.
· Property Damage: physical injury and/or loss of use to tangible property.
· Your Product: Insured’s product and others trading in Insured’s name and product of acquired person or organization.
· Your Work: work by Insured or on his behalf and such materials, parts, equipment.
Care, Custody or Control: R.D. McCollum v. The Economical Mutual Insurance Co. (1962): contractor sandblasting building damaged windows, building not in care/custody/control of contractor so loss covered.  Now, this exclusion applies only to personal property (not real property).

STUDY 9  MISC. LIABILITY POLICIES

GARAGE LIABILITY: premises/operations of a garage, service station or parking lot; includes products & completed operations.  Sometimes CGL policy written to include garage risks by endorsement (this is more comprehensive).
Rating: Garage--by estimated payroll; Open air parking lot--by area.

EMPLOYERS LIABILITY:
· For injury to employees on duty, employers must ensure safe workplace; to protect employers Workers’ Compensation and/or Employers Liability Insurance (with/without Voluntary Compensation Coverage).
· Not all types of employees covered by Workers’ Compensation.
· Usually Employers Liability insurance added by endorsement to CGL policy.
· Limits per employee per accident.
· Exclusions: liability assumed under contract, aircraft, Workers’ Compensation, workers employed illegally by age, injuries from structural alterations like moving buildings, new construction, demolition, some exclusions can be removed by negotiation.
Voluntary Compensation for Employees Endorsement: regardless of liability, subject to limits, release of liability required.
Contingent Employers Liability Coverage: applies when such insurance is necessary even though Workers’ Compensation applies, e.g. when working outside home jurisdiction; e.g. employer assumes certain liabilities under contract.

WORKERS' COMPENSATION
Workers’ Compensation Acts: all of Canada; cost of injuries sustained by employees spread over industry as whole.  Employees don’t have to prove employer negligent.  Most types of employment covered.  Employers pay assessments to Workers’ Compensation Boards who pay compensation to injured employees.  Assessments * as danger associated with type of work *.  Some workers excluded: farm, domestic servants, casual employees, etc.  Some big companies can pay themselves according to Workers’ Compensation rates (self-insurance).
Benefits: if benefits chosen, employee cannot sue employer.
· Injury Medical Expenses: excess to other plans, no limit.
· Total Disability: % of earnings to maximum limit.
· Spousal: spouse and children receive ‘indemnity’ payments.
· Rehabilitation Plans
Accident Prevention: inspections, recommendations, close premises.
Occupational Diseases: covered, specified diseases, new diseases added, must be from employment, fault/negligence not possible.
Subrogation: Workers’ Compensation cannot sue employer, can subrogate against responsible party.

TENANTS’ FIRE LEGAL LIABILITY INSURANCE: part of CGL and CPLP policies, limited to perils of fire, smoke, explosion, sprinkler leakage.  Also, Tenants’ Broad Form Legal Liability: for broader coverage.

BAILEES’ COVERAGE: damage to property of others; specific insurance.

POLLUTION ENDORSEMENTS:
(1) Pollution Liability Extension Endorsement (Form # 2300): ‘Full Buy-Back Cover’-deletes premises and operations exclusion; excludes government directed clean-up since may not be BI or PD then.  For low risk Insureds.
(2) Limited Pollution Liability Coverage Endorsement (2313): ‘Limited Buy-Back Cover’-limited coverage for owned/rented/occupied premises & off-site operations; no waste handling, cleaning up, treatment of pollutants.  Unexpected or unintentional loss—detected within 120 hours of start—reported within 120 hours of detection.  For low risk Insureds.

NON-OWNED AUTOMOBILE LIABILITY POLICY: protects employers when employees operate non-owned vehicles while on business.

PERSONAL LIABILITY INSURANCE: like CGL for social, domestic, pleasure pursuits.  Covers individual as private citizen against liability for BI/PD from the ownership or occupancy of dwelling, or ownership of pets. Indemnity and/or defence paid.  Usually sold in package like Homeowners, Condo., or Tenants policies. 4 Sections:
(1) Personal Liability: liability for personal actions worldwide; excludes vehicles, property, employees.  Exclusions: vehicles, PD from work done by Insured, BI to resident of household.
(2) Premises Liability: liability for ownership/occupancy of premises.  Exclusions PD from work done by Insured, BI to resident of household.
(3) Tenants Legal Liability: premises/contents used by Insureds as tenants.  Exclusions: smoke from fireplace, contractual liability.
(4) Employers Liability: BI to residence employees from employment. Exclusions: aircraft, Workers’ Compensation.
Extensions of Coverage: up to stated limit, paid without liability of Insured and not prejudicing Insured.  2 Extensions:
(1) Voluntary Medical Payments: reasonable payments for accidental BI. Exclusions: vehicles, Workers’ Compensation.
(2) Voluntary Payment for Property Damage: damage by Insured and children of Insured.  Covers liability regarding certain watercraft of stated size, up to 25 HP lawn/garden/snow equipment, golf carts, wheelchairs, other non-owned vehicles (not automobiles) with limitations.
Business Pursuits: very limited coverage; more for added premium.
Residence Voluntary Compensation of Employees, Endorsement: BI/Death benefits from employment.
Premium: flat charge per residence plus amounts for pools, offices, etc.

FARMERS’ PERSONAL LIABILITY POLICY: for farmer’s premises and personal activities.  Includes farming operations and employees.  Excludes malpractice (professional services) and other business pursuits.  3 Sections:
1. Legal Liability: Personal/Premises/Tenants
2. Voluntary Medical Payments
3. Voluntary Payments for Property Damage
Rating: rate schedule for different classifications, per acre and area of locale.

STUDY 10 UNDERWRITING EXPOSURE MEASUREMENT

Moral Hazard: involves the Insured; deficiency of character.  Less important for liability policies as payments go to third parties (collusion between the Insured and claimant is possible though).  Difficult to detect prior to loss; difficult to improve.  Look at claims history.

Physical Hazard: involves the subject of insurance; information from:
(1) Application: often risk is accepted based on information contained in application.  Quebéc: Articles 2398, 2400, 2410, 2413 dictate information contained in application.
(2) Inspections: can reveal physical hazards to underwriter prior to accepting risks; also recommends ways of correcting these hazards.
(3) Surveys: more comprehensive & expensive than inspections—used for commercial risks.  More information required for more complex and hazardous risks, Y2K.
(4) Claims Adjusters’ Reports: from past claims history; includes comments on desirability of risk (moral & physical hazards).

Underwriting Decision: based on many factors: premises upkeep, workforce morale, previous claims, underwriter will decide whether to accept the risk, and whether to apply reinsurance.

EXAM TIME--GOOD LUCK!!!