Liability Claims Management Flashcards

What is the key distinction between 'general damages' and 'special damages' in a personal injury claim?

Answer: General damages compensate for non-economic losses like pain and suffering; special damages are quantifiable economic losses like medical bills

Special damages (or 'specials') are out-of-pocket economic losses supported by documentation, while general damages compensate for non-economic harms that cannot be precisely calculated.

A claims professional receives a demand that substantially exceeds the insured's policy limits. What is the most appropriate immediate action?

Answer: Notify the insured in writing of the demand, potential excess exposure, and the right to retain personal counsel

When a demand exceeds policy limits, the insurer must promptly notify the insured of the excess exposure so the insured can protect their personal assets by retaining independent counsel.

Under 'negligence per se,' what replaces the standard of care element when the defendant has violated a statute or regulation?

Answer: The statutory or regulatory standard automatically satisfies the duty and breach elements

Negligence per se uses the violation of a statute designed to protect a class of persons (of which the plaintiff is a member) as conclusive or presumptive evidence of negligence.

Which of the following is the best example of a 'written consent to settle' clause in a liability policy?

Answer: A provision requiring the insurer to obtain the insured's consent before settling a claim

A consent-to-settle clause (also called a 'hammer clause' or 'blackmail clause') gives the insured veto power over settlements but may shift excess liability to the insured if they unreasonably withhold consent.

A construction company's subcontractor causes property damage to a neighboring building. The general contractor is sued. Which policy provision is designed to extend coverage to the general contractor for the subcontractor's work?

Answer: The additional insured endorsement naming the general contractor

Subcontractors typically add the general contractor as an additional insured on their CGL policy, extending the subcontractor's liability coverage to the general contractor for claims arising from the sub's operations.

What is the primary function of a 'high-low agreement' in litigation?

Answer: To guarantee the plaintiff a minimum recovery and cap the defendant's maximum exposure regardless of the verdict

A high-low agreement is a pre-verdict settlement tool where the defendant guarantees a minimum payment and the plaintiff accepts a maximum cap, eliminating both parties' extreme verdict risk.

In assessing comparative fault in a multi-party liability claim, which system bars a plaintiff from any recovery if they are found to be 50% or more at fault?

Answer: Modified comparative negligence (50% bar rule)

The 50% bar rule in modified comparative negligence states that a plaintiff who is equally at fault (50%) as the defendant is completely barred from recovery.