Liability Risk

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Liability Risk

• RMI 3500
• Intro. to Risk Mang. Ins.
• Robert Klein

Revised 9/24/07
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Topic Objectives

• Types of Torts
• Defenses Against Negligence
• Liability and Risk
• Tort Liability Trends
• Tort Limitations

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What is a Tort?

• A tort is a legal wrong for which the law allows
  a remedy in the form of money damages.

• Person harmed plaintiff or claimant.
• Person alleged to cause the harm defendant or
  tortfeasor.

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Types of Torts

• Intentional Torts
• Intentional act or omission that causes harm
• Examples assault, trespass, fraud, libel and
  slander.

• Strict Liability
• Injurer liable for damages, regardless of
  negligence.
• Examples Work injuries, blasting, explosives,
  wild animals.

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Types of Torts (cont.)

• Negligence
• Injurer is liable for damages to the injured when
  he fails to exercise the proper standard of
  care.

• Criteria
• Legal duty existed.
• Duty not performed.
• Damages were incurred.
• Failure to perform duty proximate cause of
  damages.

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Types of Damages

• Special Damages
• can be determined documented
• e.g., wage loss, medical expense, property damage
• General Damages (Non-Economic)
• cannot be measured directly
• e.g., pain and suffering
• Punitive Damages
• intended to punish and discourage others from
  committing the same wrongful act

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Defenses Against Negligence

• Contributory Negligence
• No damages if person hurt contributed to injury.
• Comparative Negligence
• Financial burden shared according to relative
  fault.

• Last clear chance rule
• Assumption of risk
• Injured person recognized risk inherent in
  activity.

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Other Types of Torts

• Imputed Negligence
• Employer-Employee
• Vicarious Liability
• Family Purpose Doctrine
• Joint Business Ventures
• Dram Shop Laws
• Res Ipsa Loquitur
• The things speaks for itself
• presumption of negligence
• e.g., doctor amputates wrong leg

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Potential Tort Situations

• Property Owners
• Attractive Nuisance Doctrine
• Owners/Operators of Autos
• Governmental Liability
• erosion of sovereign immunity
• Charitable Institutions
• Employer and Employee Relationship
• Parents and Children
• Animals

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Liability and Risk

• What is the traditional purpose of tort law?
• Liability, compensation deterrence
• Tort law and insurance.
• Moral Hazard?
• Adverse Selection?
• Principle of Indemnity?

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Trends in Tort Law

• Recent expansion of liability, i.e. increased
  willingness of courts to find one party liable
  for damages.
• Products Liability Professional Liability have
  become problems

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More Trends

• Traditional standard contributory negligence
• Many states have moved to comparative negligence
  standard.
• Assumption of risk defense has weakened over
  time.

• Expansion of liability for product defects
• Demise of Privity of Contract principle.
• Expansion of defects to include design defects.
• Extension of defects to include failure to
  adequately warn of dangers.

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and More Trends

• Increased general damage awards
• Evidence suggests it is faster than the inflation
  rate.
• Total damage amounts vary more.

At this time the family is grieving and suing.
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Implications

• Greater safety?
• Avoidance of activities
• Higher insurance rates
• Higher consumer prices, diminished product choice

I liked recess a lot better before the safety
helmets.
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Controlling Liability Costs

• Limits on pain and suffering
• Limits on joint and several liability
• Encourage dispute resolution
• No-fault insurance

Thank you for not suing

• Pros and Cons of Tort Limits
• How are different interests affected?
• Moral hazard and deterrence?