Liability Insurance Concepts Quiz

Which of the following is NOT an element required to establish negligence?

• Duty of Care

• Breach of Duty

• Causation

• Intent

Answer explanation

Intent is not required to establish negligence. The elements needed are Duty of Care, Breach of Duty, and Causation. Intent is relevant in intentional torts, not negligence.

What is absolute liability?

• Liability without regard to negligence, imposed for inherently dangerous activities.

• Liability that requires proof of negligence.

• Liability that only applies to intentional acts.

• Liability that is limited to property damage.

Answer explanation

Absolute liability means being responsible for damages without needing to prove negligence, especially in cases involving inherently dangerous activities.

What is negligence in the context of liability insurance?

• Failure to exercise the degree of care that a reasonably prudent person would under similar circumstances, resulting in harm to another.

• Intentional harm caused to another person.

• A legal obligation to pay for damages regardless of fault.

• A type of insurance that covers property damage only.

Answer explanation

Negligence refers to the failure to act with the care that a reasonably prudent person would exercise, leading to harm to another. This definition aligns with the correct choice, distinguishing it from intentional harm or strict liability.

What is the difference between contributory negligence and comparative negligence?

• Contributory negligence completely bars recovery if the plaintiff is at any fault, while comparative negligence allocates fault by percentage.

• Comparative negligence completely bars recovery if the plaintiff is at any fault, while contributory negligence allocates fault by percentage.

• Both contributory and comparative negligence allocate fault by percentage.

• Neither contributory nor comparative negligence allow for any recovery if the plaintiff is at fault.

Answer explanation

Contributory negligence bars recovery if the plaintiff is at fault, meaning any fault prevents compensation. In contrast, comparative negligence allows for recovery based on the percentage of fault assigned to each party.

In the context of liability insurance, what does 'assumption of risk' mean?

• The injured party knew of the danger and voluntarily assumed it, potentially barring recovery.

• The defendant assumed all risks associated with their actions.

• The insurance company assumes all risks associated with the policyholder's actions.

• The injured party is automatically entitled to compensation.

Answer explanation

'Assumption of risk' means the injured party was aware of the danger and chose to accept it, which can prevent them from recovering damages.