A person must sustain some definite harm for a liability loss to result in a valid claim. To those who can show that actual harm or injury was suffered, the court may award damages in addition to the reimbursement of defense costs.
Damage refer to a monetary award that one party is required to pay to another who has suffered loss or injury for which first party is legally liable.
Legal liability might involve following type of damages: -
· Compensatory Damage
· Punitive Damage
Compensatory Damage includes both special and general damages that are intended to compensate a victim for harm actually suffered.
Special Damages Specific, out of pocket expenses are known as special damages. In case of bodily injury claims these damages usually include hospital expenses, Doctor and miscellaneous medical expenses, ambulance charges, prescriptions and loss to wages for the time spent away from the job during recovery.
General Damages are compensatory damages awarded for losses such pain and suffering, that do not have a specific economic value.
Punitive Damages are damages awarded by a court to punish wrong doers who, through malicious or outrageous actions, cause injury damage to others.
Defense Costs
These costs include not only the fees paid to lawyers but also all the other expenses associated with defending a liability claim. Such expenses can include investigation expenses, expert witness fees, the premiums for necessary bonds, and other expenses incurred to prepare for and conduct a trial.
Activities and Situations Leading to Liability Loss Exposures
Although the following list is far from exhaustive, liability can arise from any of the following exposures: -
· Automobiles and other conveyances – Accidents that result in bodily injury, death or property damage of another party.
· Premises – Accidental fall of a third party at the residence or business premises.
· Business operations – Products of the organization should be defect free and must solve the purpose otherwise leading to liability due to malfunction.
· Completed operations – Faulty workman ship can always lead to a liability claim.
· Products – Manufacture of hazardous products, usage of hazardous raw materials, hazardous waste arising out of manufacturing process, etc., are typical examples.
· Advertising – Proper permission should be sought and procedures need to be followed before releasing an advertisement of a product otherwise it may result in liability claim.
· Pollution – Many types of products pollute the environment when they are discarded. In addition, the manufacture of some products creates contaminants that, if not disposed of properly, cause environmental impairment or pollution.
· Liquor – Intoxicated persons threaten themselves as well as others. Providers of alcohol can be responsible for customers or guests who become intoxicated and injure someone while drunk.
· Professional activities – Attorneys, physicians, architects, engineers and other professionals are considered experts in their field and are expected to perform accordingly. Errors and Omissions (E &O) are negligent acts (errors) or failures to act (omissions) committed by a profession in the conduct of business that give rise to legal liability for damages.
Liability Loss Exposures and Policy Provisions
