Casualty insurance is concerned with losses caused by injury to other persons and legal liability imposed upon the insured for such injury or damage to property of others.
That’s a legal mouth-full so here are some helpful definitions:
Insurer – the insurance company issuing a policy.
Insured – the named person(s) covered by the policy.
Tortfeasor – the person in a claim getting his booty sued.
Claimant – the wronged person doing the suing.
Liability – – any legally enforced money related obligation.
An insurer is obligated to cover casualty damages under an insurance policy if the nature of the damages are covered by the policy. For instance, a homeowners policy will not cover a professional liability claim because one deals with property related liability and the other deals with professional services produced in a workplace. Professional malfeasance, even if it occurs in your home, is considered outside the scope of a homeowners policy and would be excluded from coverage.
Some common liability coverages:
Bodily Injury – liability stemming from injury, sickness, or disease sustained by a person including death. Some courts have included emotional distress even when it does not cause physical harm.
Personal Injury – liability stemming from libel, slander, defamation, wrongful entry or eviction, false arrest, wrongful detention or malicious prosecution. These fall under the category of intentional torts. Insurance policies will only cover listed intentional torts.
Advertising Injury – liability stemming from libel or slander; publishing material that constitutes an invasion of privacy; misappropriation of advertising ideas; infringement of copyright, title or slogan.
Property Damage – liability stemming from physical damage to tangible property. Includes loss of use and loss of use of undamaged property.
Professional Liability – liability stemming from injury or losses caused by improper rendering of professional services including errors in judgment or omissions.
Wrongful Acts – liability stemming from harmful acts or omissions, allegedly committed or attempted by an insured.
Coverage on an insurance policy is expressed one of three ways:
Single limits – contains a single dollar amount that applies to all damages done in one occurrence. Sometime called a combined single limit (CSL).
Split limits – Separate limits for bodily injury claims and property damage claims. Common in auto insurance, expressed as say 100/300/100 limits: $100,000 bodily injury per each injured person, limited to $300,000 total bodily injury for two or more injured persons and $100,000 property damage per occurrence.
Aggregate limits – the maximum amount an insurer will pay per coverage period from all occurrences.
In addition, insurers will pay for defense costs associated with the defense of the insured. This cost will stop if/when the policy limits have been paid out. However, if a claimant does not accept the full policy limit as settlement, the insurer is obligated to continue defending the insured until a final court judgment has been rendered