Associate in Risk Management ARM 54 -Chapter 4 Understanding the Legal Foundations of Liability Loss Exposures Presented by: Lynne Lovell RHU CLU ChFC CIC CRM ARM CPCU AFSB ASLI AINS MLIS CRIS Understanding the RM Process Educational Objectives 1. Describe liability loss exposures arising out of torts. 2. Describe liability loss exposures arising out of contracts 3. Describe liability loss exposures arising out of statutes Legal Liability Responsibility imposed by law for an act or the failure to act 1
Legal Liability Three Types: Torts Contracts Statutes Legal Liability Torts Contracts Statutes Negligence Breach of Contract Workers Compensation Intentional Torts Hold-Harmless Agreements Other Statutes Defining Legal Duties & Standard of Care Strict Liability Torts Tort Wrongful act or omission, other than a crime or a breach of contract, for which the remedy is usually monetary damages 2
Negligence failure to exercise degree of care that a reasonably prudent person would have exercised under similar circumstances to avoid harming another person or legal entity Must prove the four elements of negligence Four elements of negligence Defendant owed a legal duty of care Defendant breached legal duty of care Breach of duty was proximate cause of harm Plaintiff suffered actual injury or damage Defendants defensesto negligence used to preclude plaintiff from establishing any of the elements of negligence Contributory negligence extent that plaintiff s own negligence contributed to the loss Comparative negligence plaintiff s negligence that caused own harm Assumption of risk plaintiff s act of accepting possibility of harm 3
Statute of limitations period of time to file a legal action Immunities applies to some persons or organizations who cannot be held liable for torts within the scope of immunity Additional factors in proving negligence Negligent entrustment Negligence per se Joint & several liability Res ipsa loquitor Vicarious liability Intentional torts committed with intent to perform the act Torts against persons Assault Battery False imprisonment False arrest Defamation libel/slander Invasion of privacy Malicious prosecution Malicious abuse of process 4
Torts involving property Trespass Conversion Nuisance Torts involving business Fraud Bad Faith Trade disparagement Strict liability not based on negligence or intent to cause harm Contract Legally enforceable agreement between two or more parties that creates an obligation to do, or not to do, something. 5
Legal Liability arises out of Breach of contract or agreement Agreement to assume liability of another party Hold-harmless agreement Indemnity agreement Four elements of legally enforceable contract 1. Agreement Consists of an offer and an acceptance 2. Consideration Something of value from promisee that promisor requested or bargained for in a contract 3. Capacity to contract 4. Legal purpose Statute of frauds requires certain contracts to be in writing and contain signature of party performing under contract 6
Breach of contract failure to perform as promised Can sue for monetary damages Seek remedy of specific performance defendant needs to do what is promised in contract Injured party must prove amount of direct loss resulting from breach of contract Hold-harmless/Indemnity agreements Indemnitor promises to pay indemnitee for certain sustained losses Construction site #3 Liability Arising out of Statutes Statute A written law passed by a legislative body. 7
#3 Liability Arising out of Statutes Statutes can be Federal or State and impose civil and criminal liability Workers compensation Absolute legal obligation to compensation other persons if certain events occur Provides prompt compensation to injured employees without need for lawsuit Financial responsibility laws for operating vehicles SMART Practice Exams Online Thank you! Now it s time for Open Mic Q&A "The universe is full of magical things patiently waiting for our wits to grow sharper." --Eden Phillpotts (Author, poet & insurance officer!) 8