Understanding Liability Insurance Basics

If a store owner fails to clean up a spill and a customer slips and is injured, which legal concept applies?

• Negligence

• Vicarious liability

• Strict liability

• No-fault

Answer explanation

Negligence applies here because the store owner failed to take reasonable care by not cleaning the spill, leading to the customer's injury. This failure to act constitutes a breach of duty.

A business owner signs a contract making them responsible for any injuries that occur during a special event. An injury occurs, and the injured party sues. What must the court consider to determine if the business owner is liable under contractual liability?

• Whether the contract clearly assigned liability for such injuries to the business owner

• Whether the business owner was negligent

• Whether the injured party was an employee

• Whether the event was profitable

Answer explanation

The court must consider whether the contract clearly assigned liability for injuries to the business owner, as this determines their contractual responsibility, regardless of negligence or other factors.

Which of the following is an example of vicarious liability?

• An employer being responsible for an employee’s actions during work hours

• A person injuring themselves at home

• A car being stolen from a parking lot

• A neighbor’s tree falling on your house

Answer explanation

Vicarious liability occurs when one party is held responsible for the actions of another. An employer is liable for an employee's actions during work hours, making this the correct example of vicarious liability.

Which of the following is NOT a requirement to prove negligence?

• Duty

• Breach

• Causation

• Profit

Answer explanation

To prove negligence, one must establish duty, breach, and causation. Profit is not a requirement in this context, making it the correct answer as it does not relate to the elements needed to prove negligence.

What is the primary purpose of liability insurance?

• To provide coverage for losses caused by the insured’s negligence

• To insure property against fire

• To pay for routine medical checkups

• To cover life insurance claims

Answer explanation

The primary purpose of liability insurance is to provide coverage for losses caused by the insured’s negligence, protecting them from financial claims resulting from their actions.

Which of the following is a component of negligence?

• Damages

• Profit

• Ownership

• Consent

Answer explanation

In negligence, a plaintiff must prove damages, which are the losses suffered due to the defendant's actions. Profit, ownership, and consent are not components of negligence.

A delivery driver causes an accident while making deliveries for their employer. The injured party sues the employer. What legal principle supports the employer’s liability?

• Vicarious liability, because the employee was acting within the scope of employment

• Strict liability, because the accident was unavoidable

• No-fault, because the driver was not at fault

• Intentional tort, because the accident was planned

Answer explanation

Vicarious liability applies here because the delivery driver was acting within the scope of employment when the accident occurred, making the employer liable for the driver's actions.

Why might "no fault" benefits be important in auto insurance?

• They provide quick payment for injuries regardless of who caused the accident

• They only pay if the insured is at fault

• They cover only property damage

• They are required for all types of insurance

Answer explanation

'No fault' benefits are crucial because they ensure that injured parties receive prompt compensation for their medical expenses, regardless of who was responsible for the accident, facilitating quicker recovery.

If an insured party is sued for an intentional tort, which type of liability is involved?

• Intentional tort liability

• No-fault liability

• Strict liability

• Vicarious liability

Answer explanation

If an insured party is sued for an intentional tort, the liability involved is intentional tort liability, as it pertains to actions taken with intent to cause harm.

What does "bodily injury" refer to in liability insurance?

• Damage to property

• Physical harm, sickness, or death caused by the insured’s negligence

• Loss of income

• Theft of personal items

Answer explanation

"Bodily injury" in liability insurance specifically refers to physical harm, sickness, or death caused by the insured’s negligence, distinguishing it from property damage or other types of loss.